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Exam 8: Property Dispositions

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Question 41

Multiple Choice

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Kelly, a single individual, has $15,000 of taxable income before a long-term capital gain of $5,000 on the sale of some stock owned for two years that she sold in 2018.What is the tax rate applied to this gain?

A) 0 percent
B) 10 percent
C) 15 percent
D) 20 percent

E) A) and B)
F) A) and C)

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Question 42

Multiple Choice

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Which of the following is a capital asset?

A) Accounts receivable of a business
B) Personal auto
C) Land used as a movie theater parking lot
D) Business office furniture

E) B) and D)
F) A) and D)

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Question 43

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On January 4, 2019, Courtney gave his son, Brian, stock valued at $10,000 that he had purchased three years earlier for $16,000.Later in the year, Brian sold the stock for $11,000.What is the amount and type of gain or loss that Brian will report on this sale?

Ian and Mia married in early 2019 and purchased a new home together.Each owned and lived in separate residences prior to the marriage.Ian purchased his residence 5 years ago for $190,000 and he added a master bedroom and bathroom addition at a cost of $40,000.Mia purchased her home three years ago for $135,000.In late 2019, Ian sold his residence for $510,000 and paid a sales commission of $8,000.After paying off his $80,000 mortgage balance, he received the remaining cash proceeds of $422,000.In late 2019 Mia sold her residence for $190,000 and paid a sales commission of $2,000.She had paid off her mortgage so she received $188,000 cash from the sale.If Ian and Mia file a joint tax return for 2019, how much gain do they recognize on their 2019 joint tax return from the sales of their previous homes?

Which of the following comparisons is correct?

Margo purchased 2,000 shares of qualifying Section 1202 stock six years ago for $200,000.In the current year, she sold the stock for $2,000,000.How much gain can she exclude from her income?

Individuals can only deduct capital losses to the extent of capital gains plus $3,000.

Jason sells a piece of equipment for $43,000.The equipment was purchased four years ago for $56,000.It was depreciated using an accelerated method of depreciation.Its adjusted basis at the time of sale is $21,000.Straight-line depreciation would have been only $20,000.What is the amount and type of gain Jordan recognizes on this sale?

Ginger sold stock that she had purchased five years ago for $15,000 to her brother, Carl, for $12,000.The next month, Carl sold the stock for $11,000.What is the amount and type of gain or loss included in Carl's income from this sale?

Lopez Corporation sold equipment that it had purchased for $300,000 ($100,000 cash and a note for $200,000) four years ago..As of the date of sale, Lopez had claimed $187,500 in accumulated depreciation on this equipment and had made $50,000 in principal payments on the note.Lopez received $80,000 cash and a note for $100,000 in addition to the purchaser assuming Lopez's $150,000 note on the equipment.What is Lopez Corporation's realized gain on the sale?

Alpha Corporation had income from operations of $30,000.What is the corporation's taxable income including the following property transactions: Gain on investment stock held for two years = $8,000; loss on machinery held three years = $6,000; $4,000 loss on equipment held 10 months; $4,000 gain on land used for six years for storage of trucks.

The Section 1231 look-back rules change the character of capital losses incurred in the previous 5 years.

Wally (who is in the 24 percent tax bracket) has a $5,000 short-term capital loss on some bonds, a $6,000 long-term capital loss on collectibles, a $15,000 Section 1202 gain, and a net $4,000 long-term capital gain from an investment.What is amount and type of gain(s) and tax rate(s) applied?

What are the carryover provisions for unused capital losses applicable to corporations?

On March 17, a calendar-year taxpayer sells a machine used in its business for $9,500.The machine was purchased sixteen months earlier for $9,000 and depreciation deductions of $1,800 have been taken.What is the amount and type of gain recognized on the sale?

Lopez Corporation sold equipment that it had purchased for $300,000 ($100,000 cash and a note for $200,000) four years ago.As of the date of sale, Lopez had claimed $187,500 in accumulated depreciation on this equipment and had made $50,000 in principal payments on the note.Lopez received $80,000 cash and a note for $100,000 in addition to the purchaser assuming Lopez's $150,000 note on the equipment.What is the amount realized by Lopez Corporation on this sale?

To determine the tax, a taxpayer with a $5,000 gain on the sale of a collectible and a $10,000 gain on the sale of stock, adds the gain on the stock to income after the gain on the collectible.

Paul has a $45,000 net Section 1231 gain in the current tax year from his only property transaction.Last year he had a $12,000 net Section 1231 gain, but two years ago he had a $51,000 net Section 1231 loss.If he has no other property transactions in the current year, how will Paul treat his net Section 1231 gains this year?

An individual taxpayer has the following property transactions during the current year: How do these transactions affect the individual's AGI?

Coley Corporation has an $800 net short-term capital loss and a $6,000 net long-term capital gain in the current year.It also has an $8,000 long-term capital loss carryover from the prior year.What is Coley's capital loss carryover to the next year?