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Exam 14: Property Transactions: Capital Gains and Losses

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Question 21

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Section 1250 depreciation recapture will apply when accelerated depreciation was used on property used outside the United States and the property is sold at a gain.

A) True
B) False

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Question 22

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"Collectibles" held long-term and sold at a gain are subject to maximum tax rate of 28%.An individual taxpayer recently sold a baseball card for $400.The card had been held for several years and $40 was originally paid for it.The card depicts a famous baseball player (who hit 73 home runs in a recent season)when he was a rookie in the major leagues.Explain why the baseball card is or is not a collectible.

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The definition of "collectibles" is quit...

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Question 23

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Samuel,head of household with two dependents,has 2011 wages of $26,000,paid alimony of $3,000,has taxable interest income of $2,000,and a $12,000 0%/15% net long-term capital gain.Samuel uses the standard deduction and is age 38.What is his 2011 taxable income and the tax on the taxable income?

An individual taxpayer with 2011 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2012.

The tax law requires that capital gains and losses be separated from other types of gains and losses.Among the reasons for this treatment are:

An individual taxpayer has the gains and losses shown below.There are $5,000 of § 1231 lookback losses.What is the net long-term capital gain?

In 2010,Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2011,Jenny has a $16,000 0%/15% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct?

On January 18,2010,Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11,2011,she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10,2012,Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2010.On that date,Blue Corporation stock had a market price of $4 per share.What is Martha's recognized gain or loss and its character in 2011? In 2012?

Ann had the following transactions during 2011: a painting held for three years and sold at a gain of $85,000; 100 shares of Gray stock held six months and sold for a loss of $3,000; 50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Ann also had $364,000 of taxable income from other sources than these property transactions.What is Ann's net capital gain or loss and what is her taxable income?

Phil's father died on January 10,2011.The father had owned stock for 20 years with a basis of $45,000 that was transferred to Phil as a gift on August 10,2010,when the stock was worth $430,000.His father paid gift tax of $31,000.This stock was worth $566,000 at the date of the father's death.Phil sold the stock for $545,000 net of commissions on February 23,2011.What is the amount and nature of Phil's gain or loss from disposition of this property?

Monty is in the business of painting.He paints for wealthy investors.He paints a portrait and sells it for a lump sum.He has:

The only things that the grantee of an option may do with an option are to exercise it or sell or to exchange it.

An individual taxpayer received a valuable antique vase from his aunt,a famous collector.The collector purchased the vase.After the taxpayer held the vase for two years,he sold it for a $400,000 gain.The gain is a long-term capital gain.

The Code contains two major depreciation recapture provisions-§§ 1243 and 1248.

Which of the following assets held by a wholesale business is an ordinary asset?

Charmine,a single taxpayer with no dependents,has already incurred a $10,000 § 1231 gain in 2011 and has no § 1231 lookback losses.The taxpayer purchased a business machine for $100,000 five years ago,$70,000 of depreciation has been taken on it,and the machine is now worth $90,000.How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $322,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses,what is her taxable income?

Cyan Company sold machinery for $55,000 on December 23,2011.The machinery had been acquired on April 1,2009,for $69,000 and its adjusted basis was $14,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Which of the following statements is correct?

A business taxpayer sold all the depreciable assets of the business,calculated the gains and losses,and would like to know the final character of those gains and losses.The taxpayer had $53,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $12,000.What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed? What is the taxpayer's adjusted gross income? (Ignore the self-employment tax deduction.)

On June 1,2011,Bruce purchased an option to buy 1,000 shares of General,Inc.at $30 per share.He purchased the option for $2,000.It was to remain in effect for six months.The market experienced a decline during the latter part of the year,so Bruce decided to let the option lapse as of December 1,2011.On his 2011 tax return,what should Bruce report?