Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

Indicate whether a gain or loss realized in each of the following situations would be long-term or short-term by putting an "X" on the appropriate blank line:
​

Accepted Answer

a.Long-term
b.Short-term
c.Short-term
d.Long-term
e.Long-term

Question 3

Sol purchased land as an investment on January 12,2011 for $85,000.On January 31,2017,Sol sold the land for $30,000 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?

Accepted Answer

A) $65,000 loss 
B) $15,000 gain 
C) $5,000 gain 
D) $90,000 gain 
E) None of the above 
A) $65,000 loss 
B) $15,000 gain 
C) $5,000 gain 
D) $90,000 gain 
E) None of the above B

Question 4

Stewart,age 44,sells his personal residence of 4 years on June 14,2017,for $190,000.The expenses of sale are $15,000 and he has paid for capital improvements of $3,000.Stewart purchased the residence for $100,000.On February 2,2018,Stewart purchases and occupies a new residence at a cost of $200,000.
a.Calculate the gain realized on the sale of Stewart's residence.
b.How much gain must be recognized on the sale of Stewart's residence?
c.Calculate Stewart's basis in the new residence.

Accepted Answer

The answer of Stewart,age 44,sells his personal residence of 4...

Question 5

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 of
Harry Potter and the Sorcerer's Stone ______
e.An antique grandfather clock inherited from the taxpayer's aunt ______

Accepted Answer

a.Yes
b.Ye

Question 6

Which of the following is not true about capital assets?

Accepted Answer

A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets. 
A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets.

Question 7

Carlos bought a building for $113,000 in 2013.He added an addition to the building for $26,000.In 2017,he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

Accepted Answer

A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000 
A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000

Question 8

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

At the end of the current year,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?

Accepted Answer

The answer of At the end of the current year,Falstaff...

Question 10

In December,2017,Ben and Jeri (married filing jointly)have a long-term capital gain of $55,000 on the sale of stock held for 4 years.They have no other capital gains and losses for the year.After standard deduction and personal exemptions,their ordinary income for the year,before the capital gain,is $75,900,making their total income for the year $130,900, ($75,900 + $55,000).In 2017,married taxpayers who file jointly pay tax of $10,452.50 at 10 percent and 15 percent rates (from the tax rate schedules)on the first $75,900 of ordinary taxable income and 25 percent on ordinary taxable income up to $153,100.What is their total tax liability?

Accepted Answer

A) $10,452.50 
B) $21,452.50 
C) $18,702.50 
D) $29,752.50 
A) $10,452.50 
B) $21,452.50 
C) $18,702.50 
D) $29,752.50

Question 11

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

Accepted Answer

A) There must be no cash exchanged to qualify. 
B) The properties exchanged cannot be personal residences. 
C) Office furniture can be exchanged for computers. 
D) A new holding period for capital gains treatment starts on the day the exchange is completed. 
A) There must be no cash exchanged to qualify. 
B) The properties exchanged cannot be personal residences. 
C) Office furniture can be exchanged for computers. 
D) A new holding period for capital gains treatment starts on the day the exchange is completed.

Question 12

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

Accepted Answer

A) $25,000 
B) $38,000 
C) $42,000 
D) $45,000 
E) None of the above 
A) $25,000 
B) $38,000 
C) $42,000 
D) $45,000 
E) None of the above

Question 13

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

Accepted Answer

A) A capital asset bought on June 30,2016 and sold June 20,2017. 
B) A capital asset bought on July 25,2016 and sold August 19,2017. 
C) A capital asset bought on September 12,2010 and sold August 19,2017. 
D) A capital asset bought on August 15,2016 and sold August 16,2017. 
E) All of the above are long-term gains/losses. 
A) A capital asset bought on June 30,2016 and sold June 20,2017. 
B) A capital asset bought on July 25,2016 and sold August 19,2017. 
C) A capital asset bought on September 12,2010 and sold August 19,2017. 
D) A capital asset bought on August 15,2016 and sold August 16,2017. 
E) All of the above are long-term gains/losses.

Question 14

To have the like-kind exchange provisions apply,a taxpayer must make an election.

Accepted Answer

A) True 
 B)False

Question 15

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.
​

Accepted Answer

$200 loss.The loss is a Sectio

Question 16

Bennett purchased a tract of land for $20,000 in 2011 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 2017 and the value of the land fell to $15,000.Bennett can claim a loss in 2017 of:

Accepted Answer

A) $0 
B) $5,000 
C) $165,000 
D) $180,000 
E) None of the above 
A) $0 
B) $5,000 
C) $165,000 
D) $180,000 
E) None of the above

Question 17

After 4 years of life in the slow lane,Doug decided to give up his goat ranch and move back to the big city.He sold the goat milking machine for $1,000.The machine originally cost $1,200 and had $820 of accumulated depreciation at the time of sale.
​
a.What is the total gain or loss on the sale of the goat milking machine?
b.Is the gain or loss treated as capital or ordinary? Explain.

Accepted Answer

a.$620 gain.$1,000 - ($1,200 -

Question 18

For purposes of taxation of capital gains:

Accepted Answer

A) Short-term capital gains are taxed at 5 percent. 
B) Ordinary income tax rates are applied to gains on collectibles. 
C) Gains on Section 1231 assets may be treated as long-term capital gains,while losses in some cases may be deducted as ordinary losses. 
D) Under the provisions of Section 1245,any gain recognized on the disposition of a Section 1245 asset will be classified as a capital gain. 
A) Short-term capital gains are taxed at 5 percent. 
B) Ordinary income tax rates are applied to gains on collectibles. 
C) Gains on Section 1231 assets may be treated as long-term capital gains,while losses in some cases may be deducted as ordinary losses. 
D) Under the provisions of Section 1245,any gain recognized on the disposition of a Section 1245 asset will be classified as a capital gain.

Question 19

Which one of the following qualifies as a like-kind exchange?

Accepted Answer

A) A chicken held by a farmer exchanged for medical services. 
B) A home owned and lived in by a taxpayer exchanged for a new personal residence. 
C) IBM stock exchanged for Exxon stock. 
D) A Dodge Ram pickup truck used in business traded in for a new Ford F-250 pickup truck also intended for business use. 
E) None of the above are like-kind property. 
A) A chicken held by a farmer exchanged for medical services. 
B) A home owned and lived in by a taxpayer exchanged for a new personal residence. 
C) IBM stock exchanged for Exxon stock. 
D) A Dodge Ram pickup truck used in business traded in for a new Ford F-250 pickup truck also intended for business use. 
E) None of the above are like-kind property.

Question 20

Terry has a casualty gain of $1,000 and a casualty loss of $5,500,before the $100 floor and before the adjusted gross income limitation.The gain and loss were the result of two separate casualties occurring during the current year and both properties were personal-use assets.If Terry itemizes deductions on her current year return and has adjusted gross income of $25,000,what is Terry's gain or net itemized deduction as a result of these casualties?

Accepted Answer

A) $5,300 itemized deduction,$1,000 capital gain 
B) $1,900 itemized deduction 
C) $1,800 itemized deduction 
D) $2,800 itemized deduction,$1,000 capital gain 
E) None of the above 
A) $5,300 itemized deduction,$1,000 capital gain 
B) $1,900 itemized deduction 
C) $1,800 itemized deduction 
D) $2,800 itemized deduction,$1,000 capital gain 
E) None of the above

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

Indicate whether a gain or loss realized in each of the following situations would be long-term or short-term by putting an "X" on the appropriate blank line:

Sol purchased land as an investment on January 12,2011 for $85,000.On January 31,2017,Sol sold the land for $30,000 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?

Which of the following is not true about capital assets?

Carlos bought a building for $113,000 in 2013.He added an addition to the building for $26,000.In 2017,he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

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

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

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

To have the like-kind exchange provisions apply,a taxpayer must make an election.

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.

Bennett purchased a tract of land for $20,000 in 2011 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 2017 and the value of the land fell to $15,000.Bennett can claim a loss in 2017 of:

For purposes of taxation of capital gains:

Which one of the following qualifies as a like-kind exchange?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 8: Capital Gains and Losses

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

Indicate whether a gain or loss realized in each of the following situations would be long-term or short-term by putting an "X" on the appropriate blank line: ​

Sol purchased land as an investment on January 12,2011 for $85,000.On January 31,2017,Sol sold the land for $30,000 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?

Which of the following is not true about capital assets?

Carlos bought a building for $113,000 in 2013.He added an addition to the building for $26,000.In 2017,he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

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

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

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

To have the like-kind exchange provisions apply,a taxpayer must make an election.

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. ​

Bennett purchased a tract of land for $20,000 in 2011 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 2017 and the value of the land fell to $15,000.Bennett can claim a loss in 2017 of:

For purposes of taxation of capital gains:

Which one of the following qualifies as a like-kind exchange?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Indicate whether a gain or loss realized in each of the following situations would be long-term or short-term by putting an "X" on the appropriate blank line:

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.