Exam 8: Capital Gains and Losses

Simon sold investment property 2 years ago for $750. Simon's basis in the property was $300. Simon is receiving $150 per year from the buyer. Simon reports this income on the installment method. If Simon collects $150 in principal during the current year, how much gain should he report from the sale for the year?

For purposes of determining the adjusted basis of a capital asset at the time of its sale,

The basis of property received as an inheritance is generally equal to the fair market value at the date of death.

Terry has a casualty gain of $1,000 and a casualty loss of $5,400, before the $100 floor and before the adjusted gross income limitation. The gain and loss were the result of two separate casualties occurring during 2014 and both properties were personal-use assets. If Terry itemizes deductions on her 2014 return and has adjusted gross income of $25,000, what is Terry's gain or net itemized deduction as a result of these casualties?

An asset's adjusted basis is computed as:

If property is inherited by a taxpayer,

Karen received a stock portfolio upon the death of her grandmother. The stock originally cost her grandmother $32,000, but was worth $250,000 when she died. What is Karen's tax basis in the stock portfolio? Explain.

Ben purchased an apartment building about 10 years ago, for $200,000. The building has been depreciated over the appropriate recovery period using the straight-line method. On December 31, 2014, the building was sold for $220,000, when the accumulated depreciation was $62,500. Ben is in the highest tax bracket; on his 2014 tax return, he should report:

Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2014, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Jerry bought his home 15 years ago for $60,000. Three years ago Jerry married Debbie and she moved into the same house and has lived there since. If they sell Jerry's house in December, 2014 for $340,000, what is their taxable gain on a joint tax return?

Elmer sold machinery used in his business for $20,000. The machinery originally cost $80,000 and had $35,000 of accumulated depreciation at the time of the sale. It is his only sale this year. a.What is the gain or loss on the sale of the machinery? b.Is the gain or loss treated as capital or ordinary? Explain.

Carlos bought a building for $113,000 in 2010. He built an addition to the building for $26,000. In 2014, he sold it for $186,000. What was his long-term capital gain?

If insurance proceeds exceed the taxpayer's basis in property destroyed by fire and the proceeds are not invested in similar property, the taxpayer may be required to recognize a gain.

If a capital asset acquired on October 27, 2002 is sold on April 30, 2014 for a gain, the gain is a long-term capital gain.

In 2014, Marc, a single taxpayer, has ordinary income of $35,000. In addition, he has $3,000 in short-term capital gains, short-term capital losses of $6,000, and long-term capital gains of $4,000. What is Marc's adjusted gross income (AGI) for 2014?

Martha has a net capital loss of $20,000 and other ordinary taxable income of $48,000 for the current tax year. What is the amount of Martha's taxable income after deducting the allowed capital loss?

If the following are capital assets, mark with a "Yes." If they are not capital assets, mark with a "No." a. A taxpayer's personal jet ski ______ b. Ford Motor Credit Company bond held by an investor ______ c. A baseball for sale at Sports.com ______ d. J.K. Rowling's personal copy of her original manuscript ofHarry Potter and the Sorcerer's Stone ______ e. An antique grandfather clock inherited from the taxpayer's aunt ______

In 2014, Helen sold Section 1245 property for $6,000. The property cost $26,000 when it was purchased 5 years ago. The depreciation claimed on the property was $25,000. a.Calculate the adjusted basis of the property. b.Calculate the amount of ordinary income under Section 1245. c.Calculate the Section 1231 gain.

In January 2014, Keyaki Construction Company exchanged an old truck, which cost $53,000 and had accumulated depreciation of $16,000, for a new truck having a fair market value of $65,000. In connection with the exchange, Keyaki paid $32,000 in cash. What is the tax basis of the new truck?

For 2014, long-term capital gains are not afforded preferential tax treatment.