Exam 8: Capital Gains and Losses

Tim sells land to Brad for $90,000. Tim originally purchased the land for $50,000. Brad agrees to pay Tim six annual installments of $15,000 each. In year three, Brad makes his third installment of $15,000. How much taxable gain will Tim have in year three?

Bennett purchased a tract of land for $20,000 in 2005 when he heard that a new highway was going to be constructed through the property and the land would soon be worth $200,000. The highway project was abandoned in 2014 and the value of the land fell to $15,000. Bennett can claim a loss in 2014 of:

Bev owns an apartment complex she purchased 10 years ago for $480,000 with a $80,000 cash down payment accompanied by a $400,000 loan. Bev has made $70,000 of capital improvements on the complex and her depreciation claimed on the building to date is $100,000. Calculate Bev's adjusted basis in the building.

Perry acquired raw land as an investment in 2000. The land cost $60,000. In 2014, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer's note for $110,000. Assume that Perry uses the installment method to recognize the gain and receives only the $10,000 down payment in the year of sale. How much gain should Perry recognize in 2014?

Which of the following is true of a like-kind exchange:

Which of the following sales results in a short-term gain/loss?

In October of the current year, Mike sold a share of Berkshire-Hathaway for $73,000. He had acquired it several years ago at a cost of $42,000. He also sold Microsoft stock he had held for 3 years at a gain of $17,000. He had a short-term $2,000 loss on the sale of stock of a start-up technical company. He has $85,000 in taxable income before capital transactions are taken into account. ​ Assuming Mike is single with no dependents, what is the amount of Mike's tax on the capital transactions?

Which one of the following is true about Section 1231 assets?

Which of the following is a capital asset?

On December 31, 2014, Henry, a sole proprietor, sold for $70,000 a machine that was used in his business. The machine had been purchased in a few years ago for $50,000, and when it was sold, it had accumulated depreciation of $15,000 and an adjusted basis of $35,000. For the year 2014, how should this gain be treated?

Rod had the following personal casualty in 2014: ​ ​ ​ ​ Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

Lorreta has a manufacturing business. In 2014, her storage building is completely destroyed by fire and she receives $310,000 from her insurance company. She purchased the building for $300,000 in 1995 and has claimed depreciation of $80,000 using the straight-line method. In 2015, she purchases a new storage building at a cost of $290,000. a.Calculate Lorreta's realized gain or loss. b.​Assuming Lorreta makes an election under the involuntary conversion provision, calculate Lorreta's recognized gain or loss? c.​Assuming Lorreta makes an election under the involuntary conversion provision, what is Lorreta's basis in the new building?

Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2014, Sol sold the land for $20,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

In 2014, Penny exchanges an investment property in Santa Barbara with a mountain view for a lot with an ocean view in a qualifying like-kind exchange. Penny's basis in the land given up is $100,000 and the property has a fair market value of $250,000. In exchange for her property, Penny receives land with a fair market value of $200,000 and cash of $20,000. In addition, the other party to the exchange assumes a mortgage loan on Penny's property of $30,000. a.Calculate Penny's realized gain, if any, on the exchange. b.Calculate Penny's recognized gain, if any, on the exchange. c.Calculate Penny's basis in the property received.

Which of the following statements is true?

Martha has a net capital loss of $17,000 and other ordinary taxable income of $45,000 for the current year. What is the amount of Martha's capital loss carryforward?

Which of the following assets is not a Section 1231 asset?

At the end of 2014, Falstaff sold for $4,800 General Martin stock that was purchased 5 months ago for $4,000. He also sold Cedar stock for $6,000 at the same time. The Cedar stock cost $4,000, 2 years ago. In addition, Falstaff has a short-term capital loss of $500 on the sale of silver. a.Calculate the amount of Falstaff's net short-term and net long-term capital gain or loss. b.If Falstaff has a net capital gain, what is the maximum rate at which the gain will be taxed?

Joseph exchanged land (tax basis of $34,000), that he had held for 4 years as an investment, for similar land valued at $42,000 which was owned by Adrian. In connection with this transaction, Adrian assumed Joseph's $11,000 mortgage. As a result of this transaction Joseph should report a long-term capital gain of:

In a like-kind exchange, relief from a liability is treated as boot.