Question 1

In a community property state,jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to

Accepted Answer

A) the decedent's basis before death. 
B) the total fair market value of the entire property at the date of death (if the alternative valuation date was not elected). 
C) half of the fair market value of the entire property at the date of death (if the alternative valuation date was not elected). 
D) half of the basis just before death,plus half of the fair market value at the date of death (if the alternative valuation date was not elected). 
A) the decedent's basis before death. 
B) the total fair market value of the entire property at the date of death (if the alternative valuation date was not elected). 
C) half of the fair market value of the entire property at the date of death (if the alternative valuation date was not elected). 
D) half of the basis just before death,plus half of the fair market value at the date of death (if the alternative valuation date was not elected).

Question 2

Gain on sale of a patent by an inventor generally is ordinary income.

Accepted Answer

A) True 
 B)False

Question 3

In the current year,ABC Corporation had the following items of income,expense,gains,and losses:   What is taxable income for the year?

Accepted Answer

A) $135,000 
B) $141,000 
C) $144,000 
D) $150,000 
A) $135,000 
B) $141,000 
C) $144,000 
D) $150,000

Question 4

Josh purchases a personal residence for $278,000 but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Josh sells the property for $280,000,his gain or loss will be

Accepted Answer

A) $2,000 gain. 
B) $5,000 gain. 
C) $67,000 gain. 
D) $70,000 gain. 
A) $2,000 gain. 
B) $5,000 gain. 
C) $67,000 gain. 
D) $70,000 gain.

Question 5

Andrea died with an unused capital loss carryover of $3,300.The carryover

Accepted Answer

A) may be carried back three years. 
B) will be fully used on Andrea's final income tax return. 
C) will be inherited by Andrea's heirs. 
D) expires with death. 
A) may be carried back three years. 
B) will be fully used on Andrea's final income tax return. 
C) will be inherited by Andrea's heirs. 
D) expires with death.

Question 6

Bob owns 100 shares of ACT Corporation common stock with a basis of $3,500 and a FMV of $12,000.Bob receives 10 stock rights as a nontaxable distribution,and no basis is allocated to the stock rights.With each stock right,Bob may acquire one share of stock for $25.Bob exercises all 10 stock rights.The total basis of the newly acquired stock is

Accepted Answer

A) $ 0. 
B) $ 250. 
C) $ 350. 
D) $1,200. 
A) $ 0. 
B) $ 250. 
C) $ 350. 
D) $1,200.

Question 7

How long must a capital asset be held to qualify for long-term treatment?

Accepted Answer

A) 6 months 
B) one year 
C) one year and one day 
D) same trade date one year from purchase 
A) 6 months 
B) one year 
C) one year and one day 
D) same trade date one year from purchase

Question 8

Kate subdivides land held as an investment and Section 1237 is satisfied.The lots sell for $30,000 per lot (basis $10,000).Kate sells five lots in the first year.Kate's ordinary income is

Accepted Answer

A) $0. 
B) $20,000. 
C) $100,000. 
D) $150,000. 
A) $0. 
B) $20,000. 
C) $100,000. 
D) $150,000.

Question 9

Dale gave property with a basis of $16,000 to Sarah when it had a FMV of $12,000.No gift taxes were due.Sarah later sold the property for $22,000 resulting in a recognized gain of

Accepted Answer

A) $0. 
B) $4,000. 
C) $6,000. 
D) $12,000. 
A) $0. 
B) $4,000. 
C) $6,000. 
D) $12,000.

Question 10

This year,Lauren sold several shares of stock held for investment.The following is a summary of her capital transactions for 2015:   What are the amounts of Lauren's capital gains (losses)for this year?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 11

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?

Accepted Answer

A) Sophia may recognize a $1,000 STCL. 
B) Sophia may recognize a $1,000 LTCL. 
C) Sophia may recognize a $1,000 ordinary income. 
D) Sophia may not recognize a loss. 
A) Sophia may recognize a $1,000 STCL. 
B) Sophia may recognize a $1,000 LTCL. 
C) Sophia may recognize a $1,000 ordinary income. 
D) Sophia may not recognize a loss.

Question 12

Darla sold an antique clock in 2015 for $3,000.She had purchased the clock in 2009 for $2,000.If she is otherwise in the 33% marginal tax bracket,what is the maximum tax rate on the capital gain on the sale of the clock?

Accepted Answer

A) 33% 
B) 15% 
C) 28% 
D) 20% 
A) 33% 
B) 15% 
C) 28% 
D) 20%

Question 13

Chen had the following capital asset transactions during 2015:   What is the adjusted net capital gain or loss and the related tax due to the above transactions,assuming Chen has a 25% marginal tax rate?

Accepted Answer

Long-term @#IMG-DLM& Short-ter

Question 14

Topaz Corporation had the following income and expenses during the current year:   What is Topaz's taxable income?

Accepted Answer

A) $30,000 
B) $50,000 
C) $52,000 
D) $20,000 
A) $30,000 
B) $50,000 
C) $52,000 
D) $20,000

Question 15

All of the following are capital assets with the exception of

Accepted Answer

A) personal residence. 
B) corporate stock held for investment. 
C) equipment used in a trade or business. 
D) a Rembrandt painting held in a private collection. 
A) personal residence. 
B) corporate stock held for investment. 
C) equipment used in a trade or business. 
D) a Rembrandt painting held in a private collection.

Question 16

Gains and losses are recognized when property is disposed of by gift or bequest.

Accepted Answer

A) True 
 B)False

Question 17

Amanda,whose tax rate is 33%,has NSTCL of $25,000,a $30,000 LTCG from sale of a rare coin held 15 months and a $18,000 LTCG from the sale of stock held for three years.By what amount will Amanda's tax liability increase?

Accepted Answer

A) $3,450 
B) $4,100 
C) $6,440 
D) $7,340 
A) $3,450 
B) $4,100 
C) $6,440 
D) $7,340

Question 18

Brad owns 100 shares of AAA Corporation with a basis of $6,000 and a FMV of $24,000.Brad receives 15 stock rights as a nontaxable distribution with a total FMV of $6,000.Brad allows the stock rights to expire.Brad's loss recognized and the basis of the original 100 shares after expiration of the stock rights is

Accepted Answer

A) $0 and $4,800. 
B) $0 and $6,000. 
C) ($1,200)and $4,800. 
D) ($1,200)and $6,000. 
A) $0 and $4,800. 
B) $0 and $6,000. 
C) ($1,200)and $4,800. 
D) ($1,200)and $6,000.

Question 19

Max sold the following capital assets this year:   What is the amount of and nature of (LT or ST)capital gain or loss?

Accepted Answer

@#IMG-DLM& _______________________________________

Question 20

On January 1 of this year,Brad purchased 100 shares of stock at $4,000.By December 31 of this year,the stock had declined in value to $2,200,but Brad still held the shares.Brad has realized a $1,800 loss for tax purposes this year.

Accepted Answer

A) True 
 B)False

Exam 10: Property Transactions: Capital Gains and Losses

In a community property state,jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to

Gain on sale of a patent by an inventor generally is ordinary income.

In the current year,ABC Corporation had the following items of income,expense,gains,and losses: What is taxable income for the year?

Josh purchases a personal residence for $278,000 but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Josh sells the property for $280,000,his gain or loss will be

Andrea died with an unused capital loss carryover of $3,300.The carryover

How long must a capital asset be held to qualify for long-term treatment?

Kate subdivides land held as an investment and Section 1237 is satisfied.The lots sell for $30,000 per lot (basis $10,000).Kate sells five lots in the first year.Kate's ordinary income is

Dale gave property with a basis of $16,000 to Sarah when it had a FMV of $12,000.No gift taxes were due.Sarah later sold the property for $22,000 resulting in a recognized gain of

This year,Lauren sold several shares of stock held for investment.The following is a summary of her capital transactions for 2015: What are the amounts of Lauren's capital gains (losses)for this year?

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?

Darla sold an antique clock in 2015 for $3,000.She had purchased the clock in 2009 for $2,000.If she is otherwise in the 33% marginal tax bracket,what is the maximum tax rate on the capital gain on the sale of the clock?

Chen had the following capital asset transactions during 2015: What is the adjusted net capital gain or loss and the related tax due to the above transactions,assuming Chen has a 25% marginal tax rate?

Topaz Corporation had the following income and expenses during the current year: What is Topaz's taxable income?

All of the following are capital assets with the exception of

Gains and losses are recognized when property is disposed of by gift or bequest.

Amanda,whose tax rate is 33%,has NSTCL of $25,000,a $30,000 LTCG from sale of a rare coin held 15 months and a $18,000 LTCG from the sale of stock held for three years.By what amount will Amanda's tax liability increase?

Max sold the following capital assets this year: What is the amount of and nature of (LT or ST)capital gain or loss?

On January 1 of this year,Brad purchased 100 shares of stock at $4,000.By December 31 of this year,the stock had declined in value to $2,200,but Brad still held the shares.Brad has realized a $1,800 loss for tax purposes this year.

Tax Research

an Introduction to Taxation

Corporate Formations and Capital Structure

Determination of Tax

The Corporate Income Tax

Gross Income: Inclusions

Corporate Nonliquidating Distributions

Gross Income: Exclusions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Deductions and Losses

Corporate Acquisitions and Reorganizations

Itemized Deductions

Consolidated Tax Returns

Losses and Bad Debts

Partnership Formation and Operation

Employee Expenses and Deferred Compensation

Special Partnership Issues

Depreciation,cost Recovery,amortization,and Depletion

Corporations

Accounting Periods and Methods

The Gift Tax

Property Transactions: Nontaxable Exchanges

The Estate Tax

Property Transactions: Section 1231 and Recapture

Income Taxation of Trusts and Estates

Special Tax Computation Methods,tax Credits,and Payment of Tax

Administrative Procedures

Filters