Exam 8: Property Dispositions

All assets owned by a trade or business are Section 1231 assets.

Bobsy Company has a $14,000 net Section 1231 gain for the current tax year from its only property transaction. In the previous year, it had a $7,000 net Section 1231 loss. For the current year, the net Section 1231 gain will be taxed as:

The Walford Partnership (owned by two individuals) sold an apartment building for $300,000 that it purchased for $280,000 ten years ago. The partnership took $80,000 of depreciation deductions on the building. What is the amount and type of gain realized by the partnership on the sale and taxed to the individual partners?

Abbey has the following gains and losses from property transactions. What is the effect on taxable income if Abbey is (a) a corporation; (b) an individual? Long-term capital gain $2,000 Long-term capital loss 12,000 Section 1231 gain 20,000 Section 1231 loss 15,000 Short-term capital gain 3,000 Short-term capital loss 2,000

On January 4, 2018, 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?

Brent sold his personal car and some household furniture during the year. He had a $3,000 gain on the car but a $5,000 loss on the furniture. What is his recognized gain or loss included in taxable income as a result of these sales?

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?

Donza Company has unrecaptured Section 1231 losses from the two previous years totaling $25,000 and a $32,000 Section 1231 gain in the current year. Based on this information, all of the following statements concerning Donza's taxable income for the current year are correct except:

Bill is single with taxable income of $95,000 and in the 24 percent tax bracket in 2018. During the year, he sold some stock held for 11 months at a $500 gain, gold coins held for two years at a $1,900 loss, antique toys held three years at a $2,200 gain, bonds held for two years for $400 gain, and some investment land held six months at a $300 loss. Determine Bill's net capital gain or loss and detail how it will be treated for tax purposes.

The tax effect of a sale of an asset at a gain increases the cash flow from the sale.

What is the effect of the Section 1231 look-back rules?

Becky bought a home with her husband, Ken, in 2004 for $125,000. They were divorced in 2013 and Becky became sole owner of the home under the divorce decree. On January 5, 2017, Becky married Michael. Michael and Becky have been living in the house since their marriage but they are planning now to move. If Michael and Becky sell their home on December 15, 2018 for $500,000, how much taxable gain must they report on their 2018 joint tax return?

Why is the character of a gain or loss on a disposition important? What are the three types of recognized gains or losses that determine their taxation?

Which of the following is not a requirement for the stock of a corporation to be considered Section 1244 stock?

An individual taxpayer has the following property transactions during the current year: Personal automobile owned 3 years $4,000 loss on sale Business equipment owned 3 years $5,600 gain on sale Factoring of receivables $6,200 loss Common stock owned 7 months $3,500 gain on sale How do these transactions affect the individual's AGI?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -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?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Wesley sold a piece of property for $30,000 cash paying a $3,000 sales commission. The buyer assumed Wesley's $13,000 mortgage on the property. Wesley had purchased the property for $15,000 and had invested an additional $6,000 in it. What is Wesley's realized gain on the sale?

A taxpayer who disposed of his or her home in 2017 in a short sale had to recognize up to $1 million in cancellation of indebtedness income.

What are the basic long-term capital gain tax rates and to which asset gains do they apply?

Melody works in her home using a computer she purchased two years ago for $2,500. The total adjusted basis for the computer is now $1,000. Her husband and children used the computer 20 percent of the time to play computer games and for personal correspondence. She sells the computer for $1,200. How much and what kind of gain does Melody recognize?