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Exam 14: Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

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Question 31

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An individual taxpayer has the gains and losses shown below.There are $3,000 of § 1231 lookback losses.What is the net long-term capital gain?

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The taxpayer has a net long-term capital...

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Question 32

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Sara is filing as head of household and has 2010 taxable income of $27,000 which includes $13,000 of net long-tem capital gain.The net long-term capital gain is made up of $10,000 25% gain and $3,000 0%/15% gain.What is the tax on her taxable income using the alternative tax method?

A) $0.
B) $2,345.
C) $3,003.
D) $4,003.
E) None of the above.

F) A) and E)
G) A) and D)

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Question 33

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The chart below details Sheen's 2008,2009,and 2010 stock transactions.What is the capital loss carryover to 2010 and what is the net capital gain or loss for 2010?

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.

Which of the following events causes the purchaser of an option to add the cost of the option to the basis of the property to which the option relates?

A barn held more than one year and used in a business is destroyed in a tornado.The barn originally cost $356,000 and was fully depreciated using straight-line depreciation.The barn was insured for its $543,000 replacement cost minus a deductible of $1,000.Which of the statements below is correct concerning these facts?

Spencer has an investment in two parcels of vacant land.Parcel 1 is a capital asset and parcel 2 is a § 1231 asset.Spencer already has short-term capital loss for the year he would like to offset with capital gain.Spencer has § 1231 lookback loss that exceeds the gain from the disposition of either land parcel.Spencer only wants to sell one land parcel and each of them would yield the same amount of gain.The gain that would be recognized exceeds the short-term capital loss Spencer already has.Which of the statements below is correct?

White Company acquires a new machine for $35,000 and uses it in White's manufacturing operations.A few months after White places the machine in service,it discovers that the machine is not suitable for White's business.White had fully expensed the machine in the year of acquisition using § 179.White sells the machine for $5,000 in the tax year after it was acquired,but held the machine only for a total of 10 months.What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

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 $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $22,000.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. )

Which of the following assets held by a cash basis accounting firm is a § 1231 asset?

For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.

If § 1231 asset casualty gains and losses net to a gain,the gain is treated as a § 1231 gain.

Section 1231 property generally does not include musical compositions.

A business machine purchased April 10,2008,for $202,000 was fully depreciated in 2008 using § 179 immediate expensing.On August 15,2010,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

A business taxpayer sells inventory for $40,000.The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held more than one year.The taxpayer has:

Recognized gains and losses must be properly classified.Proper classification depends upon:

Which of the following real property could be subject to § 1250 depreciation recapture?

Betty,a single taxpayer with no dependents,has the gains and losses shown below.Before considering these transactions,Betty has $45,000 of other taxable income.What is the treatment of the gains and losses and what is Betty's taxable income?

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses.

Hilda lent $2,000 to a close personal friend to help the friend avoid overdrawing the friend's checking account.The friend was supposed to repay the $2,000 within a month.Instead,the friend declared personal bankruptcy and Hilda will never recover any of the $2,000.What are the tax implications of these events for Hilda?