Exam 5: Property Transactions: Capital Gains and Losses

Kendrick, who has a 33% marginal tax rate, had the following results from transactions during the year: After offsetting the STCL, what is (are) the resulting gain(s)?

Adam purchased 1,000 shares of Airco Inc. common stock for $22,000 on February 3, 2013. On April 1, 2015, Adam received 100 new shares in a nontaxable stock dividend. As of April 1, the stock was trading at $25 per share. Adam sells the 100 new shares on June 15, 2015 for $2,400. Due to the stock sale, Adam will recognize a

Corporate taxpayers may offset capital losses only against capital gains and may carry excess losses back three years and then forward five years.

When a 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.

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?

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

Rita died on January 1, 2015 owning an asset with a FMV of $730,000 that she purchased in 2010 for $600,000. Bert inherited the asset from Rita. When Bert sells the asset for $800,000 on August 20, 2015, he must recognize a

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

For purposes of calculating depreciation, property converted from personal use to business use will take on a basis equal to the greater of its FMV or its adjusted basis on the date of the conversion.

If the stock received as a nontaxable stock dividend is not the same type as the stock owned prior to the dividend, the allocation of basis is based on relative fair market values of the stock.

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

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

What type of property should be transferred to heirs at a decedent's death and why? Should estate planning also mean that some property is transferred prior to death? Why?

Bad debt losses from nonbusiness debts are deductible as short-term or long-term capital losses depending on how long the debt was outstanding.

During the current year, Tony purchased new car wash equipment for use in his service station business. Tony's costs in connection with the new equipment this year were as follows: What is Tony's basis in the car wash equipment?

Joel has four transactions involving the sale of capital assets during the year resulting in a STCG of $5,000, a STCL of $12,000, a LTCG of $1,800 and a LTCL of $1,000. As a result of these transactions, Joel will

Mike, a dealer in securities and calendar-year taxpayer, purchased a security for inventory on November 18, 2014 for $15,000. The FMV on December 31, 2014 was $16,000. The security was sold on December 19, 2015 for $16,500. These transactions result in

If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend, the original stock's basis is allocated to all shares

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?

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?