Exam 5: Property Transactions: Capital Gains and Losses

A taxpayer owns 200 shares of stock in a corporation purchased in two blocks of 100 shares for different amounts and at different dates.The taxpayer sells 100 shares.Barring any specific instructions,the brokerage firm will report the cost basis using the higher cost block of stock first.

In 2014 Toni purchased 100 shares of common stock in Blue Corporation for $5,280.In 2015,Blue declared a stock dividend of one share of its common stock for each 10 shares held.This year,2016,Blue's common stock split 2 for 1 at a time when the FMV was $80 a share.What is Toni's basis in each of her shares of the Blue Corporation stock if both of the earlier stock dividends were tax-free?

Purchase of a bond at a significant discount will result in the investor recognizing a capital gain when the bond matures.

Candice owns a mutual fund that reinvests her dividends and capital gains earned during the year.The mutual fund reported to her that her share of earnings was: $500 in dividends,$1,500 in short-term net capital gains,and $1,300 in long-term net capital gains.She reported the items on her tax return and paid the appropriate tax on these earnings.If her basis in the fund was $25,000 at the beginning of the year,what is her basis at the end of the year?

When an individual taxpayer has NSTCL and NLTCG,the loss is offset against NLTCG from the 28% group,then NLTCG from the 25% group,and finally against NLTCG from the 15% or 20% group.

Richard exchanges a building with a basis of $35,000,and subject to a liability of $25,000,for land with a FMV of $50,000 owned by Bill.Bill takes the building subject to the liability.What is the amount of Richard's realized gain?

On January 31 of the current year,Sophia pays $1,000 for an option to acquire 100 shares of Texas Corporation common stock for $105 per share at any time prior to December 31.As of December 31,Sophia had not exercised the option or sold it.Which of the following statements is correct?