Exam 5: Property Transactions: Capital Gains and Losses

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

In 2011 Toni purchased 100 shares of common stock in Blue Corporation for $5,280. In 2012, Blue declared a stock dividend of one share of its common stock for each 10 shares held. This year, 2014, 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 distributions were tax-free?

To be considered a Section 1202 gain, the stock being sold must meet all of the following characteristics except

On July 25, 2013, Marilyn gives stock with a FMV of $7,500 and a basis of $5,000 to her nephew Darryl. Marilyn had purchased the stock on March 18, 2013. Darryl sold the stock on April 18, 2014 for $7,800. As a result of the sale, what will Darryl report on his 2014 tax return?

If the taxpayer's net long-term capital losses exceed the net short-term capital gains, the excess may be offset against ordinary income up to $3,000 per year. Any excess losses over $3,000 may be carried over indefinitely.

The taxable portion of a gain from qualified small business stock is taxed at a top tax rate of

Distinguish between the Corn Products doctrine and the ruling in the Arkansas Best Corporation case.

Expenditures which do not add to the value or prolong the life of property may be expensed in the year in which they are incurred.

Section 1221 of the Code includes a comprehensive list of assets properly classified as capital assets.

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

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

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

On July 25, 2013, 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, 2013. Bill sold the stock on April 18, 2014 for $6,000. As a result of the sale, what must Bill report on his 2014 tax return?

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?

Net long-term capital gains receive preferential tax treatment if they exceed net short-term capital losses.

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 recognized a $1,800 loss for tax purposes this year.

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?

Allison buys equipment and pays cash of $50,000, signs a note of $10,000 and assumes a liability on the property for $3,000. Also, Allison pays an installation cost of $500 and a delivery cost of $800. Allison's basis in the asset is

Galvin Corporation has owned all of the stock of Rialto Corporation for five years. Rialto Corporation has been actively engaged in manufacturing in Kansas, but it is now bankrupt, and the stock is worthless. Galvin Corporation will recognize a long-term capital loss.

Edward purchased stock last year as follows: In April of this year, Edward sells 80 shares for $250. Edward cannot specifically identify the stock sold. The basis for the 80 shares sold is