Exam 10: Property Transactions: Capital Gains and Losses

Section 1221 specifically states that inventory or property held primarily for sale to customers is not classified as a capital asset of the trade or business.

A building used in a trade or business is a capital asset.

A taxpayer sells an asset with a basis of $25,000 to an unrelated party for $28,000.The taxpayer has a realized gain of $3,000.

Niral is single and provides you with the following tax information for 2015: Compute her tax liability.[Show all calculations in good form.]

On July 25,2014,Karen gives stock with a FMV of $7,500 and a basis of $8,000 to her nephew Bill.Karen had purchased the stock on March 18,2014.Bill sold the stock on April 18,2015 for $6,000.As a result of the sale,what must Bill report on his 2014 tax return?

If property received as a gift has a basis of the fair market value of the property on the date of the gift,the donee's holding period starts on the day after the date of the gift.

Five different capital gain tax rates could apply to long-term capital assets sold by noncorporate taxpayers.

Kathleen received land as a gift from her grandfather.At the time of the gift,the land had a FMV of $85,000 and an adjusted basis of $110,000 to Kathleen's grandfather.One year later,Kathleen sold the land for $80,000.What was her gain or (loss)on this transaction?

Donald has retired from his job as a corporate manager.He buys and sells stocks on a daily basis.He spends 8-9 hours daily studying prospective stock purchases and market news.What tax issues should Donald consider?

Capitalization of interest is required if debt is incurred to construct real property.

Generally,gains resulting from the sale of collectibles such as antiques,stamps,or artwork are taxed at a maximum rate of 25%.

In a basket purchase,the total cost is apportioned among the assets purchased according to the relative adjusted basis of the assets.

Rachel holds 110 shares of Argon Mutual Fund.She is planning to sell 90 shares.Her record of the share purchases is noted below.What could be her basis for the 90 shares to be sold for purposes of determining gain?

The holding period of property received from a decedent is based on the actual time the property is held by the decedent.

In 2006,Regina purchased a home in Las Vegas which cost $280,000.Due to increase in the market value of the home,she refinanced her mortgage and her debt on the home totaled $300,000 at the end of 2007.Regina accepted a new job in Dallas in April 2013.Unable to sell her home,she rented it in November 2013,at which time its fair market value was $240,000.In June,2015,she sold the home for $230,000.What tax issues should Regina consider?

Stock purchased on December 15,2014,which becomes worthless in March 2015 produces a STCL since the holding period is one year or less.

Jamahl and Indira are married and live in a common law state.They jointly own real property with an adjusted basis of $200,000.When the property has a FMV of $450,000,Jamahl dies leaving all of the property to Indira.If she later sells the property for $700,000,what is Indira's gain on the sale?

Taxpayers who own mutual funds recognize their share of capital gains even if no distributions are received.

During the current year,Nancy had the following transactions: What is the amount of her capital loss deduction for the current year,and what is the amount and character of her capital loss carryover?

If stock sold or exchanged is not specifically identified,the FIFO (first-in,first-out)method of identification must be used.