Exam 7: Capital Gains and Other Sales of Property

Patty and Rich, married filing jointly, have $385,000 in MAGI and $90,000 of net investment income (NII). They will pay a surtax of:

The basis of inherited property to the beneficiary is the FMV at the date of death or alternate valuation date.

Jess sold a piece of equipment she used in her business. The equipment cost Jess $51,500 several years ago and had accumulated depreciation taken in the amount of $20,300. Jess sold the equipment for $35,000. a. What is her Section 1245 property gain? b. How much of the gain is subject to recapture at the 25% tax rate? c. How much of the gain is ordinary income?

The holding period of an asset starts on the date acquired and ends on the day the asset is sold.

For sales of Section 1231 business property, long-term gains are taxed at preferential rates while long-term losses are considered ordinary losses and deductible in the year they are incurred.

Ordinary gains or losses produced outside the normal course of business relate to the sale of business property held less than one year and do not include the sale of accounts receivable.

Jeffery, the owner of a remodeling company and a sole proprietor, sold a commercial building he used in his business. He acquired the building on February 15, 2012 for $420,000 and sold it December 30, 2015, for $480,000. Jeffery had taken $41,294 in depreciation. Assume Jeffery is in the 39.6% tax bracket and no other assets were sold in 2015. a. What is the adjusted basis of the building? b. What is the amount gain on the sale of the building? c. How much of the gain is considered unrecaptured 1250 gain? d. How much of the gain is considered a capital gain? e. Calculate the tax on the unrecaptured 1250 gain. f. Calculate the tax on the gain considered to be capital in nature.

Yolanda, a single taxpayer, has W-2 income of $87,500. She also has a short-term capital loss of $7,000, a short-term capital gain of $1,000, and a long-term capital gain of $2,000. What is Yolanda's AGI for 2015?

Lourdes, a sole proprietor, collected $8,650 on November 21, 2015 on some of her outstanding receivables. Her basis in these receivables was $0. What is the gain or loss Lourdes recognizes for 2015?

Kwon-Lee sold 200 shares held in FNP Mutual Fund in 2015 for $22,500 and received a 1099-B to record the sale of the shares. Kwon-Lee's investment portfolio includes the following purchases of FNP Mutual Fund stock: Assuming Kwon-Lee uses the single category average cost method, he will recognize

When the buyer assumes the seller's liability, the seller includes this amount in computing the amount realized from the sale.

Mikeala has taxable income of $73,240, without consideration of capital gain or loss transactions. Mikeala has a short-term capital gain of $11,000, a short-term capital gain of 3,000, and a long-term capital loss of $4,000. a. What is the net capital gain(loss) included in taxable income? b. Is it short-term or long-term in nature? c. What is the amount and nature of any carryover? d. Assuming none of the gains or losses is from collectibles or unrecaptured Section 1250 property, at what tax rate will the gains or losses be taxed to Mikeala? (Mikeala is in the 33% tax bracket for ordinary income.)

Which of the following is Section 1231 property?

Short-term capital losses first reduce 28% gains, then 25% gains, and if any loss remains, the 20%, 15% or 0% group.

Diane gifted 100 shares of Runners Link common stock with a FMV of $8,000 to her brother, Sean. The stock originally cost Diane $11,000. Sean later sells the stock on the open market for $9,000. Sean recognizes:

Elandra purchased 500 shares in Prompt Messenger Services for $12,000 on November 21, 2014. The company went bankrupt on June 12, 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?

Which one of the following is Section 1231 property?

Which of the following is a Section 1221 asset?

Keisha sold 200 shares of Chic-Chic stock in 2015 for $22,500 and received a 1099-B to record the sale of the shares. Keisha's investment portfolio includes the following purchases of Chic-Chic's stock: Assuming Keisha does not identify which shares she sold, she will recognize

Greg received a gift of 300 shares of stock from his sister, Terri. The stock cost Terri $30,000 five years ago. At the date of the gift, the stock is worth $22,500. a. If the stock is sold for $34,000, calculate the amount and nature of the gain or loss. b. If the stock is sold for $20,000, calculate the amount and nature of the gain or loss. c. If the stock is sold for $28,000, calculate the amount and nature of the gain or loss.