Exam 5: Property Transactions: Capital Gains and Losses

Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4 of the current year. His father paid $30 per share for the stock on September 2, 2005. The FMV of the stock on the date of death was $50 per share. On September 4 this year, the FMV of the stock was $55 per share. The executor did not elect the alternate valuation date. Monte sold the stock for $65 per share on December 3. What is the amount and nature of any gain or loss?

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

Rick sells stock of Ty Corporation, which has an adjusted basis of $20,000, for $22,000. He pays a sales commission of $500. In computing his gain or loss, the amount realized by Rick is $1,500.

What are arguments for and against preferential treatment of capital gains?

Courtney sells a cottage at the lake that the family had used for their summer vacations. The purchaser paid Courtney $100,000 and assumed the mortgage which had a principal balance of $50,000. Courtney had purchased the cottage five years ago for $$170,000. Courtney will recognize

Sari is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2015 for $15,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain is

Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2011, for $10,500, and has been reinvesting dividends. On December 15, 2015, she sells 100 shares. What is the basis for the shares sold assuming (1) FIFO and (2) average cost method?

Which one of the following is a capital asset?

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

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?

Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000. Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000. Jessica sold the stock rights for $4,000. Jessica's gain or loss on the sale was

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

Terrell and Michelle are married and living in New York, which is a not a community property state. They jointly own property with an adjusted basis of $240,000. On December 2 of this year, Michelle died when the property had a fair market value of $260,000. Terrell's basis in the property after Michelle's death is

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

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

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

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.

On January 31 of this year, Mallory pays $800 for an option to acquire 100 shares of Mesa Corporation common stock for $85 per share. As a result of an increase in the market value of the Mesa stock, the market price of the option increases and Mallory sells the option for $1,000 on August 4. As a result of the sale, Mallory must recognize

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?