Exam 8: Property Dispositions

Sophia, a single taxpayer, is one of the founding shareholders of Davis Corporation. She acquired her Davis Corporation Section 1244 stock four years ago for $163,000. During the current year, Sophia sold all of her Davis stock to an unrelated party for $40,000. There were no other capital gains or losses reported on her tax return for the year. What is the maximum amount of loss that can be deducted on Sophia's current year tax return for the Davis stock?

How are individual and corporate net capital losses treated?

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.

During the current tax year, the Jeckel Company has the following gains and losses from property transactions: $12,000 Section 1231 gain $23,000 long-term capital gain $21,000 Section 1231 loss $4,000 Section 1231 gain What is the amount and type of gain or loss reported by Jeckel for the year?

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

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. -Gain on the sale of a building used for 15 years by a corporation.

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. How much of Lopez Corporation's realized gain on the sale will be a net Section 1231 gain?

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?

Kevin owns a rental apartment building that he purchased several years ago for $100,000. He has claimed accumulated depreciation of $60,000 on this building. In 2018 he sells the building for $110,000. If Kevin is in the 32% marginal tax bracket and has no other property transactions this year, what tax rate or rates apply to his gain from the sale of this building?

Clem and Chloe, a married couple, sell their principal residence that they have owned and occupied for the past twenty years. The adjusted basis for the residence is $324,000. They incurred selling expenses of $30,000. How much gain must they recognize if they sell the residence for $904,000?

During the current year, Mrs. Mayhew received a used computer as a gift from her son for her personal use. The computer has a current fair market value of $350 and cost her son $850. He took $400 of depreciation deductions while it was used in his business. Mrs. Mayhew uses the computer for several years and then sells it for $200. What is the amount and type of gain or loss that Mrs. Mayhew recognizes on the sale?

Bennett, who is single, owns all of the outstanding stock of Bennett Company. In 2018 Bennett sells all of his stock in the company for $30,000. If the stock qualifies as Section 1244 and his basis in the stock is $140,000, how is his loss on the sale classified for tax purposes?

A taxpayer has the following gains and losses from property transactions completed in 2018. What is the effect on the taxpayer's taxable income and income tax if the taxpayer is (a) an individual or (b) a corporation? Long-term capital gain $21,000 Section 1231 gain 10,000 Section 1231 loss 12,000 Short-term capital gain 3,000 Short-term capital loss 18,000

The holding period for a long-term capital asset must exceed one year for tax-favored treatment.

Justin, who is single, sells his principal residence that he has owned and occupied for the past five years. His adjusted basis for the residence is $90,000. He incurred selling expenses of $10,000. How much gain must Justin recognize if sells the residence for $390,000?

Section 1245 recapture is primarily applicable to realty.