Exam 7: Capital Gains and Other Sales of Property

Demetrius had a $4,000 short-term loss and a $3,000 long-term gain from a collectible, a $2,000 gain from Section 1250 unrecaptured property. What is the netting effect of these gains and losses on his 1040?

To qualify as Section 1231 property, the property must be used in a taxpayer's trade or business and must be held for more than one year.

Stephanie sold the following stock in 2015. She received a 1099-B from each of the companies to record the sale. a. Complete the following table: b. Calculate the short-term gain (loss) after netting. c. Calculate the long-term gain (loss) after netting. d. What is the resulting gain (loss) to be shown on the return?

Respond to the following independent situations: a. Marie and Jim, husband and wife, filing jointly, earn $375,000 in salaries and do not have any net investment income. How much in surtax will Marie and Jim be assessed on their Form 1040 for 2015? ____ b. Marie and Jim, husband and wife, filing jointly, earn $275,000 in salaries and $60,000 in capital gains, $40,000 in dividends, for a total MAGI of $375,000. How much in surtax will Marie and Jim be assessed on their Form 1040 for 2015? ____ c. Marie and Jim, husband and wife, filing jointly earn $330,000 in income including $100,000 in capital gains. How much in surtax will Marie and Jim be assessed on their Form 1040 for 2015? _____

What is the basis of artistic works that have been gifted to another by the creator?

Which of the following statements is correct regarding the sale of ordinary assets as discussed in this chapter?

If a taxpayer cannot specifically identify which shares of stock were sold, the average cost of all shares held is used as the adjusted basis of the shares that were sold.

The basis of property transferred to a taxpayer from a spouse or former spouse incident to a divorce is the FMV of the property at the date the divorce was final.

A capital asset includes all of the following except:

Keeley purchased 1,000 shares in FAM Inc., for $10,000 on December 19, 2014. The company went bankrupt on July 10, 2015 with no hope of recovery for the shareholders. a. On what date is the stock deemed to be worthless? b. What is the nature of the loss?

Jeannie purchased 1,000 shares in Course Developers for $10,000 on August 11, 2014. The company went bankrupt on May 11, 2015 with no hope of recovery for the shareholders. On what date is the stock deemed to be worthless and what is the nature of the loss?

If the taxpayer has capital gain distributions from a mutual fund and no other capital gain transactions for the year, a Schedule D is not required to be prepared.

To figure the gain or loss from the sale of property received as a gift, the donee must know the donor's adjusted basis as well as the FMV at the date of the gift.

Section 1202 allows for an exclusion of up to 50% of the eligible gain on the sale or exchange of qualified small business stock if held for more than one year.

Which one of the following is a capital asset?

If land were an investment held in a trade or business, the gain or loss would be reported on Schedule D.

A taxpayer purchased land in 2013 for $26,000 and sold it in 2015 for $31,000 cash. The buyer also assumed the remaining mortgage of $13,000. What is the amount recognized on the sale of the land?

All gains and losses on the sale of property that was held for more than one year is subject to preferential tax rates.

Leslie buys a sculpture from a collector for resale in her gallery. She purchased the sculpture for $5,000 and sold it 24 months later for $9,000. What are the nature and the amount of the gain on the sale?

In 2010, Terri purchased 260 shares of Flowers R Us stock at a cost of $9,600 as an investment. In 2015, when the fair market value was $11,400, Terri gave the stock to her daughter, Michele. Assuming no gift tax was paid, if Michele sells the stock for $13,800, she will recognize: