Exam 8: Capital Gains and Losses

Dan acquired rental property in June 2004 for $370,000 and sold it in October, 2014. $35,000 in straight-line depreciation has been taken on the house. A run-up in housing prices in San Diego allowed him to sell the house for $575,000. In the year of sale, Dan received $175,000 when the buyer sold some investments, an additional $200,000 when the buyer closed a loan from the bank, and took a $200,000 note from the buyer, payable on the anniversary of the sale date in 10 installments of $20,000 each plus interest on the unpaid balance. ​ Using the installment method, calculate his taxable gain in the year of sale.

Rod had the following loss on business-use property: ​ ​ ​ ​ Calculate the amount and nature of Rod's gain or loss as a result of this casualty. ​

If a capital asset acquired August 5, 2014 is sold on February 6, 2015, any gain is a short-term capital gain.

During 2014, William sold the following capital assets: Calculate the following: a. Total short-term capital gain/loss realized for tax purposes b. Total long-term capital gain/loss realized for tax purposes c. Deductible capital gain/loss d. The amount and nature (short-term or long-term) of his capital loss carryforward e. Assuming that William has no capital gain or loss for 2015, how much can he deduct in 2015 and what is the amount and nature of any carryforward to 2016?

Taxpayers are allowed to offset net short-term capital losses with net long-term capital gains.

If the proceeds from the sale of property will be collected over a period of more than one year, a taxpayer is required to use the installment method.

The amount of ordinary income recognized on the sale of a Section 1245 asset is limited to the total gain realized on the sale.

Emily sold the following investments during the year: For each stock, calculate the amount and the nature of the gain or loss.

In 2014, Estes has net short-term capital losses of $3,000, a net long-term capital loss of $45,000, and taxable income from wages of $35,000. a.Calculate the amount of Estes' deduction for capital losses for 2014. b.Calculate the amount and nature (short-term or long-term) of his capital loss carryforward. c.For how many years may Estes carry the unused loss forward?

The office building Donna owned and used for her desk-top publishing business was destroyed by a hurricane. Although the basis of the building was $80,000, Donna carried replacement cost insurance and received $160,000 from the insurance company after it was determined that the building was a complete loss. It cost her $152,000 to rebuild the store in 2015. a. Calculate Donna's recognized gain, assuming an election under the involuntary conversion provision is made.$__________ b. Calculate Donna's basis in the replacement building.$__________

During 2014, Ethel exchanges a machine for another machine in a like-kind exchange. Ethel's adjusted basis in the machine given up is $7,000, and she receives a machine worth $13,000 plus $2,000 cash. a.Calculate the amount of gain realized by Ethel on the exchange. b.Calculate the amount of the gain that must be recognized by Ethel on the transaction. c.Calculate Ethel's basis in the new machine.

Which of the following is true about capital gains?

Which of the following statements is correct with respect to the deferral provisions of the Tax Code?

The adjusted basis of an asset may be determined by the:

A taxpayer eligible to use the installment method for reporting gain on the sale of an asset must use the installment method unless he or she elects out of the provision.

In 2014, Paul, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Paul incurred a $1,000 short-term capital loss and a $5,000 long-term capital loss. What is the amount of his long-term capital loss carryover to 2015?

For the 2014 tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to 2015?

During 2014, an office desk used by Pat in his business was completely destroyed by a fire. The adjusted basis of the desk was $900 (original cost of $1,500 less accumulated depreciation of $600). Pat received $500 from his insurance company, but he did not replace the desk. a.What is the amount of Pat's recognized gain or loss (deduction) as a result of the casualty? b.Assuming this is Pat's only casualty gain or loss for 2014, what is the nature of the gain or loss?

For the year 2014, Susan had salary income of $20,000. In addition she reported the following capital transactions during the year: There were no other items includable in her gross income. What is the amount of her adjusted gross income for 2014?

If not entirely used in one sale, the unused portion of the $250,000 exclusion on the sale of a taxpayer's principal residence may be used to reduce the recognized gain on the sale of the taxpayer's next residence.