FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Property Transactions: Capital Gains and Losses

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

A net short-term capital loss first offsets any 28% net long-term capital gain before it offsets either 25% net long-term capital gain or 0%/15% net long-term capital gain.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Short-term capital gain is eligible for a special tax rate only when it exceeds long-term capital gain.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

True/False

Review LaterAdd Note

The holding period of property given up in a like-kind exchange includes the holding period of the asset received if the property that has been exchanged is a capital asset.

Suzy purchased vacant land in 2005 that she subdivided for resale as lots.All 10 of the lots were sold during 2012.The lots had a tax basis of $9,000 each and sold for $45,000 each.Suzy made no substantial improvements to the lots.She acted as her own real estate broker; so there were no sales expenses for selling the lots.Which of the following statements is correct?

In 2011,Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2012,Jenny has a $18,000 0%/15% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct?

A franchisor licenses its mode of business operation to a franchisee.

Mauve Company signs a 13-year franchise agreement with Mauve Too.Mauve Too retained significant powers,rights,and a continuing interest.Mauve Company (the franchisee) makes noncontingent payments of $16,000 per year for the first five years of the franchise.Mauve Company also pays a contingent fee of 1% of gross sales every month.Which of the following statements is correct?

Tom has owned 40 shares of Orange Corporation stock for five years.He sells the stock short for a total of $1,100.One month later,he closes the short sale by purchasing and delivering 40 shares of Orange Corporation stock for a total of $600.Tom has a $500 short-term capital gain.

Carol had the following transactions during 2012: a painting held for two years and sold at a gain of $65,000; 100 shares of Gray stock held six months and sold for a loss of $6,000; 50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Carol also had $264,000 of taxable income from other sources than these property transactions.What is Carol's net capital gain or loss and what is her taxable income?

The chart below details Sheen's 2010,2011,and 2012 stock transactions.What is the capital loss carryover to 2012 and what is the net capital gain or loss for 2012?

Samuel,head of household with two dependents,has 2012 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 2012 taxable income and the tax on the taxable income?

A lessor is paid $45,000 by its commercial tenant as a lease cancellation fee.The tenant wanted to get out of its lease so it could move to a different building.The lessor had held the lease for three years before it was canceled.The lessor had a zero tax basis for the lease.The lessor has received:

Theresa and Oliver,married filing jointly,and both over 65 years of age,have no dependents.Their 2012 income tax facts are: What is their taxable income for 2012?

On January 18,2011,Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11,2012,she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10,2013,Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2011.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 2012? In 2013?

In 2012,Satesh has $5,000 short-term capital loss,$13,000 0%/15% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?

Magenta,Inc.,sold a forklift on April 12,2012,for $3,000 (its FMV) to its 100% shareholder,Anna.Magenta's adjusted basis for the forklift was $8,000.Anna's holding period for the forklift:

An individual taxpayer received a valuable painting from his uncle,a famous painter.The painter did not create the painting,but had purchased it from another artist.After the taxpayer held the painting for two years,he sold it for a $400,000 gain.The gain is a long-term capital gain.

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:

Laura purchased for $1,610 a $2,000 bond when it was issued two years ago.Laura amortized $200 of the original issue discount and then sold the bond for $1,800.Which of the following statements is correct?

Ranja acquires $200,000 face value corporate bonds for $186,000 when the bonds are issued.He holds the bonds as an investment for two years and then sells them for $198,000.He amortizes $2,000 of the OID.What tax issues does Ranja have with respect to these bonds?