Question 1

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?

Accepted Answer

A) $0 
B) $10,000 
C) $14,000 
D) $17,000 
E) None of the above 
A) $0 
B) $10,000 
C) $14,000 
D) $17,000 
E) None of the above

Question 2

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.

Accepted Answer

$450,000 =

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year.At the time of the sale,there is $65,000 of accumulated straight-line depreciation on the apartment building.Assuming Sally is in the 35 percent tax bracket for ordinary income,how much of her gain is taxed at 15 percent?

Accepted Answer

A) None 
B) $65,000 
C) $260,000 
D) $325,000 
E) $345,000 
A) None 
B) $65,000 
C) $260,000 
D) $325,000 
E) $345,000

Question 5

What is the treatment given to personal casualty gains and losses?

Accepted Answer

Personal casualty gains and losses are f

Question 6

Cows used in a farming business are Section 1231 property.

Accepted Answer

A) True 
 B)False

Question 7

An artist's painting is not a capital asset when held by the artist.

Accepted Answer

A) True 
 B)False

Question 8

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

Accepted Answer

A) True 
 B)False

Question 9

Sol purchased land as an investment on February 12,2016 for $85,000.On January 31,2017,Sol sold the land for $90,000 cash.What is the nature of the gain or loss?7

Accepted Answer

A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of the above 
A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of the above

Question 10

Rod had the following personal casualty in 2017:
​
​
​
   ​
Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

Accepted Answer

$1,200 long-term capital gain

Question 11

If property is inherited by a taxpayer,

Accepted Answer

A) To the recipient,the basis for the property is the same as the basis to the decedent. 
B) At sale date,the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date,the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general,the basis to the recipient is the fair market value at the decedent's date of death. 
A) To the recipient,the basis for the property is the same as the basis to the decedent. 
B) At sale date,the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date,the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general,the basis to the recipient is the fair market value at the decedent's date of death.

Question 12

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 technology 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?

Accepted Answer

Based on his other taxable inc

Question 13

For the current year,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 the current year?

Accepted Answer

A) $19,000 
B) $23,000 
C) $24,000 
D) $25,000 
E) None of the above 
A) $19,000 
B) $23,000 
C) $24,000 
D) $25,000 
E) None of the above

Question 14

Which of the following is a capital asset?

Accepted Answer

A) Inventory held by a manufacturer 
B) Accounts receivable held by a dentist 
C) All property owned by a taxpayer other than property specifically noted in the law as an exception 
D) Depreciable property and real estate used in a trade or business 
A) Inventory held by a manufacturer 
B) Accounts receivable held by a dentist 
C) All property owned by a taxpayer other than property specifically noted in the law as an exception 
D) Depreciable property and real estate used in a trade or business

Question 15

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 recognize in year three?

Accepted Answer

A) $5,000 
B) $6,667 
C) $13,333 
D) $15,000 
E) All the taxable gain should be recognized in year one. 
A) $5,000 
B) $6,667 
C) $13,333 
D) $15,000 
E) All the taxable gain should be recognized in year one.

Question 16

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:

Accepted Answer

A) $0 
B) $8,000 
C) $11,000 
D) $19,000 
E) None of the above 
A) $0 
B) $8,000 
C) $11,000 
D) $19,000 
E) None of the above

Question 17

Casualty gains and losses from business or investment property:

Accepted Answer

A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions. 
A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions.

Question 18

The exchange of shares of stock does not qualify for like-kind exchange treatment.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest.Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale.
a.​
If Verlin elects to recognize the total gain on the property in the year of sale,calculate the taxable gain.
b.​
Assuming Verlin uses the installment sale method,calculate the taxable gain he must report for the year of the sale.
c.​
​
Assuming Verlin collects $10,000 (not including interest)of the note principal in the year following the year of sale,calculate the amount of income recognized under the installment sale method.

Accepted Answer

The answer of Verlin sells a commercial building and receives...

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?

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

What is the treatment given to personal casualty gains and losses?

Cows used in a farming business are Section 1231 property.

An artist's painting is not a capital asset when held by the artist.

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

Sol purchased land as an investment on February 12,2016 for $85,000.On January 31,2017,Sol sold the land for $90,000 cash.What is the nature of the gain or loss?7

Rod had the following personal casualty in 2017: Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

If property is inherited by a taxpayer,

For the current year,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 the current year?

Which of the following is a capital asset?

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 recognize in year three?

Casualty gains and losses from business or investment property:

The exchange of shares of stock does not qualify for like-kind exchange treatment.

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 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

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?

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

What is the treatment given to personal casualty gains and losses?

Cows used in a farming business are Section 1231 property.

An artist's painting is not a capital asset when held by the artist.

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

Sol purchased land as an investment on February 12,2016 for $85,000.On January 31,2017,Sol sold the land for $90,000 cash.What is the nature of the gain or loss?7

Rod had the following personal casualty in 2017: ​ ​ ​ ​ Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

If property is inherited by a taxpayer,

For the current year,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 the current year?

Which of the following is a capital asset?

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 recognize in year three?

Casualty gains and losses from business or investment property:

The exchange of shares of stock does not qualify for like-kind exchange treatment.

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 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

Rod had the following personal casualty in 2017: Calculate the amount and nature of Rod's gain or loss as a result of this casualty.