Question 1

Which one of the following is a capital asset?

Accepted Answer

A) automobile held by car dealer for sale 
B) automobile used for personal purposes 
C) automobile used in taxpayer's trade or business 
D) B and C only 
A) automobile held by car dealer for sale 
B) automobile used for personal purposes 
C) automobile used in taxpayer's trade or business 
D) B and C only

Question 2

Unlike an individual taxpayer, the corporate taxpayer does not utilize the 25% and 28% specialty capital gain rates, but it does apply the 15% tax rate to adjusted net capital gain.

Accepted Answer

A) True 
 B)False

Question 3

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 4

An uncle gifts a parcel of land to his niece, and he has to pay gift taxes. The land has appreciated substantially since he purchased it 20 year ago. A portion of gift taxes paid by the uncle will increase the niece's basis of the land.

Accepted Answer

A) True 
 B)False

Question 5

The initial adjusted basis of property depends upon how the property is acquired.

Accepted Answer

A) True 
 B)False

Question 6

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400. As a result, Stella can offset

Accepted Answer

A) $5,200 of ordinary income and have a LTCL carryforward of $2,400. 
B) $3,000 of ordinary income and have a $4,600 STCL carryforward. 
C) $3,000 of ordinary income and have a $2,200 STCL carryforward and $2,400 LTCL carryforward. 
D) $7,600 of ordinary income. 
A) $5,200 of ordinary income and have a LTCL carryforward of $2,400. 
B) $3,000 of ordinary income and have a $4,600 STCL carryforward. 
C) $3,000 of ordinary income and have a $2,200 STCL carryforward and $2,400 LTCL carryforward. 
D) $7,600 of ordinary income.

Question 7

Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2009, for $10,500, and has been reinvesting dividends. On December 15, 2014, she sells 100 shares.
   What is the basis for the shares sold assuming (1)FIFO and (2)average cost method?

Accepted Answer

Assuming FIFO, the basis in th

Question 8

If a capital asset held for one year or more is sold at a gain, the gain is classified as long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 9

Tina, whose marginal tax rate is 33%, has the following capital gains this year:
   What is the increase in income tax caused by these items (ignore the Medicare tax on net investment income)?

Accepted Answer

The answer of Tina, whose marginal tax rate is 33%,...

Question 10

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 11

Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?

Accepted Answer

A) $0 
B) $20,000 
C) $28,000 
D) $48,000 
A) $0 
B) $20,000 
C) $28,000 
D) $48,000

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 16

In the current year, Andrew received a gift of property from his uncle. At the time of the gift, the property had a FMV of $114,000 and an adjusted basis to his uncle of $70,000. After deducting the annual exclusion, the amount of the gift was $100,000. Andrew's uncle paid a gift tax on the property of $24,000. What is the amount of Andrew's basis in the property?

Accepted Answer

A) $70,000 
B) $80,560 
C) $94,000 
D) $114,000 
A) $70,000 
B) $80,560 
C) $94,000 
D) $114,000

Question 17

Rita, who has marginal tax rate of 39.6%, is planning to make a gift to her grandson who is in the lowest tax bracket. Which of the following holdings of stock would be the most tax advantageous gift from Rita's perspective?

Accepted Answer

A)    
B)    
C)    
D) For income tax purposes, Rita will be indifferent as to choice of stock to gift. 
A)    
B)    
C)    
D) For income tax purposes, Rita will be indifferent as to choice of stock to gift.

Question 18

Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. The adjusted basis in the home is

Accepted Answer

A) $150,000. 
B) $151,000. 
C) $180,000. 
D) $181,000. 
A) $150,000. 
B) $151,000. 
C) $180,000. 
D) $181,000.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Douglas and Julie are a married couple who live in Louisiana, a community property state. They jointly own property with an adjusted basis of $140,000. On December 2 of this year, Julie died when the property had a fair market value of $160,000. Douglas's basis in the property after Julie's death is

Accepted Answer

A) $0. 
B) $140,000. 
C) $150,000. 
D) $160,000. 
A) $0. 
B) $140,000. 
C) $150,000. 
D) $160,000.

Which one of the following is a capital asset?

Unlike an individual taxpayer, the corporate taxpayer does not utilize the 25% and 28% specialty capital gain rates, but it does apply the 15% tax rate to adjusted net capital gain.

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

An uncle gifts a parcel of land to his niece, and he has to pay gift taxes. The land has appreciated substantially since he purchased it 20 year ago. A portion of gift taxes paid by the uncle will increase the niece's basis of the land.

The initial adjusted basis of property depends upon how the property is acquired.

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400. As a result, Stella can offset

Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2009, for $10,500, and has been reinvesting dividends. On December 15, 2014, she sells 100 shares. What is the basis for the shares sold assuming (1)FIFO and (2)average cost method?

If a capital asset held for one year or more is sold at a gain, the gain is classified as long-term capital gain.

Tina, whose marginal tax rate is 33%, has the following capital gains this year: What is the increase in income tax caused by these items (ignore the Medicare tax on net investment income)?

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

Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?

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

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

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

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

Rita, who has marginal tax rate of 39.6%, is planning to make a gift to her grandson who is in the lowest tax bracket. Which of the following holdings of stock would be the most tax advantageous gift from Rita's perspective?

Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. The adjusted basis in the home is

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

Douglas and Julie are a married couple who live in Louisiana, a community property state. They jointly own property with an adjusted basis of $140,000. On December 2 of this year, Julie died when the property had a fair market value of $160,000. Douglas's basis in the property after Julie's death is

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, Cost Recovery, Amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

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

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 5: Property Transactions: Capital Gains and Losses

Which one of the following is a capital asset?

Unlike an individual taxpayer, the corporate taxpayer does not utilize the 25% and 28% specialty capital gain rates, but it does apply the 15% tax rate to adjusted net capital gain.

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

An uncle gifts a parcel of land to his niece, and he has to pay gift taxes. The land has appreciated substantially since he purchased it 20 year ago. A portion of gift taxes paid by the uncle will increase the niece's basis of the land.

The initial adjusted basis of property depends upon how the property is acquired.

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400. As a result, Stella can offset

Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2009, for $10,500, and has been reinvesting dividends. On December 15, 2014, she sells 100 shares. What is the basis for the shares sold assuming (1)FIFO and (2)average cost method?

If a capital asset held for one year or more is sold at a gain, the gain is classified as long-term capital gain.

Tina, whose marginal tax rate is 33%, has the following capital gains this year: What is the increase in income tax caused by these items (ignore the Medicare tax on net investment income)?

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

Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?

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

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

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

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

Rita, who has marginal tax rate of 39.6%, is planning to make a gift to her grandson who is in the lowest tax bracket. Which of the following holdings of stock would be the most tax advantageous gift from Rita's perspective?

Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. The adjusted basis in the home is

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

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, Cost Recovery, Amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

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

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters