Question 1

A net long-term gain from the theft of a Section 1231 asset is treated as a Section 1231 gain.

Accepted Answer

A) True 
 B)False

Question 2

Sol purchased land as an investment on January 12,2014,for $85,000.On January 31,2017,Sol sold the land for $25,000 cash.In addition,the purchaser assumed the mortgage of $70,000 on the land.What is the amount realized (not gain realized)on the sale of the land?

Accepted Answer

A) $10,000 
B) $25,000 
C) $70,000 
D) $95,000 
E) None of the above 
A) $10,000 
B) $25,000 
C) $70,000 
D) $95,000 
E) None of the above

Question 3

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000.If the asset's adjusted basis is $15,000,what is the amount of capital improvements that have been made to the asset?

Accepted Answer

A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above 
A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above

Question 4

During the current year,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 the year,what is the nature of the gain or loss?

Accepted Answer

The answer of During the current year,an office desk used...

Question 5

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

Accepted Answer

A) Selling price + gain realized. 
B) Selling price - gain realized. 
C) Selling price + capital improvements - accumulated depreciation. 
D) Original basis + capital improvements - selling price. 
E) None of the above. 
A) Selling price + gain realized. 
B) Selling price - gain realized. 
C) Selling price + capital improvements - accumulated depreciation. 
D) Original basis + capital improvements - selling price. 
E) None of the above.

Question 6

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

Accepted Answer

A) Section 1231 assets are treated like capital assets when they produce losses on sale. 
B) Business property held 1 year or less is considered a Section 1231 asset. 
C) Section 1231 assets include company stock. 
D) Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined. 
E) All of the above are false. 
A) Section 1231 assets are treated like capital assets when they produce losses on sale. 
B) Business property held 1 year or less is considered a Section 1231 asset. 
C) Section 1231 assets include company stock. 
D) Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined. 
E) All of the above are false.

Question 7

Elmer sold machinery used in his business for $20,000.The machinery originally cost $80,000 and had $45,000 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.

Accepted Answer

The answer of Elmer sold machinery used in his business...

Question 8

On August 8,2017,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2017,he purchased a new residence for $80,000.For 2017,Sam should recognize a gain on the sale of his residence of:

Accepted Answer

A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above 
A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above

Question 9

In the current year,Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago.Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000.How much of the gain is taxable as ordinary income?

Accepted Answer

A) $7,000 
B) $8,000 
C) $13,000 
D) $18,000 
E) None of the above is correct 
A) $7,000 
B) $8,000 
C) $13,000 
D) $18,000 
E) None of the above is correct

Question 10

Which of the following is a capital asset?

Accepted Answer

A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above 
A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above

Question 11

The first day a capital asset acquired on August 31,2016 may be sold for long-term capital gain or loss treatment is September 1,2017.

Accepted Answer

A) True 
 B)False

Question 12

In the current year,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.

Accepted Answer

The answer of In the current year,Penny exchanges an investment...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 the current year for $340,000,what is their taxable gain on a joint tax return?

Accepted Answer

A) $0 
B) $280,000 
C) $155,000 
D) $30,000 
A) $0 
B) $280,000 
C) $155,000 
D) $30,000

Question 15

Simonne,a single taxpayer,bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

Accepted Answer

A) $0 
B) $90,000 
C) $100,000 
D) $350,000 
A) $0 
B) $90,000 
C) $100,000 
D) $350,000

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

During the current year,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 $3,000 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.

Accepted Answer

The answer of During the current year,Ethel exchanges a machine...

Question 18

The following are owned by Robert.Indicate which are capital assets.
​
a.Rental property at 123 Main Street ______
b.Tables and chairs sold in his furniture business ______
c.The cash register used in his furniture business ______
d.A 1972 Porsche 916 ______
e.The rights to Taylor Swift's song,"Blank Space" ______

Accepted Answer

a.Rental property at 123 Main

Question 19

Sol purchased land as an investment on January 12,2014 for $85,000.On January 31,2017 Sol sold the land for $90,000 cash.What is the nature of the gain or loss?

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 20

Which of the following is true about capital gains?

Accepted Answer

A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2017,long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above. 
A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2017,long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above.

A net long-term gain from the theft of a Section 1231 asset is treated as a Section 1231 gain.

Sol purchased land as an investment on January 12,2014,for $85,000.On January 31,2017,Sol sold the land for $25,000 cash.In addition,the purchaser assumed the mortgage of $70,000 on the land.What is the amount realized (not gain realized)on the sale of the land?

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000.If the asset's adjusted basis is $15,000,what is the amount of capital improvements that have been made to the asset?

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

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

On August 8,2017,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2017,he purchased a new residence for $80,000.For 2017,Sam should recognize a gain on the sale of his residence of:

In the current year,Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago.Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000.How much of the gain is taxable as ordinary income?

Which of the following is a capital asset?

The first day a capital asset acquired on August 31,2016 may be sold for long-term capital gain or loss treatment is September 1,2017.

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

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 the current year for $340,000,what is their taxable gain on a joint tax return?

Simonne,a single taxpayer,bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

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

The following are owned by Robert.Indicate which are capital assets. a.Rental property at 123 Main Street b.Tables and chairs sold in his furniture business c.The cash register used in his furniture business d.A 1972 Porsche 916 e.The rights to Taylor Swift's song,"Blank Space" __

Sol purchased land as an investment on January 12,2014 for $85,000.On January 31,2017 Sol sold the land for $90,000 cash.What is the nature of the gain or loss?

Which of the following is true about capital gains?

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

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Exam 8: Capital Gains and Losses

A net long-term gain from the theft of a Section 1231 asset is treated as a Section 1231 gain.

Sol purchased land as an investment on January 12,2014,for $85,000.On January 31,2017,Sol sold the land for $25,000 cash.In addition,the purchaser assumed the mortgage of $70,000 on the land.What is the amount realized (not gain realized)on the sale of the land?

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000.If the asset's adjusted basis is $15,000,what is the amount of capital improvements that have been made to the asset?

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

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

On August 8,2017,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2017,he purchased a new residence for $80,000.For 2017,Sam should recognize a gain on the sale of his residence of:

In the current year,Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago.Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000.How much of the gain is taxable as ordinary income?

Which of the following is a capital asset?

The first day a capital asset acquired on August 31,2016 may be sold for long-term capital gain or loss treatment is September 1,2017.

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

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 the current year for $340,000,what is their taxable gain on a joint tax return?

Simonne,a single taxpayer,bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

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

Sol purchased land as an investment on January 12,2014 for $85,000.On January 31,2017 Sol sold the land for $90,000 cash.What is the nature of the gain or loss?

Which of the following is true about capital gains?

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