Exam 5: Property Transactions: Capital Gains and Losses

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?

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

A nonbusiness bad debt is deductible only in the year in which the debt becomes totally worthless.

In a basket purchase, the total cost is apportioned among the assets purchased according to the relative adjusted basis of the assets.

Jordan paid $30,000 for equipment two years ago and has claimed total depreciation deductions of $15,600 for the two years. The cost of repairs during the same time period was $2,000 while a major overhaul which extended the life of the equipment cost $7,000. What is Jordan's adjusted basis in the equipment at the end of the two-year period?

Arthur, age 99, holds some stock purchased many years ago for $10,000 which is now worth $100,000. He is trying to plan for the eventual disposition of this stock. Arthur's only remaining family member is his grandson. For income tax purposes, Arthur should

Trista, a taxpayer in the 33% marginal tax bracket sold the following capital assets this year: What is the amount of and nature of (LT or ST) capital gain or loss? Be specific as to the rates at which gains, if any, are taxed.

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.

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

Nate sold two securities in 2015: Nate has a 25% marginal tax rate. What is the additional tax resulting from the above sales?

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

Dennis purchased a machine for use in his business. Mr. Dennis' costs in connection with this purchase were as follows: What is the amount of Mr. Dennis' basis in the machine?

Five different capital gain tax rates could apply to long-term capital assets sold by noncorporate taxpayers.

Melanie, a single taxpayer, has AGI of $220,000 which includes $160,000 of salary and $60,000 of investment income. She will pay Medicare tax on the $60,000 of investment income of

On July 25, 2014, 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, 2014. Darryl sold the stock on April 18, 2015 for $7,800. As a result of the sale, what will Darryl report on his 2014 tax return?

Margaret died on September 16, 2015, when she owned securities with a basis of $50,000 and a FMV of $60,000. Caroline inherited the property and sold it on December 19, 2015 for $67,000. What is Caroline's reported gain on this sale?

A taxpayer owns 200 shares of stock in a corporation purchased in two blocks of 100 shares for different amounts and at different dates. The taxpayer sells 100 shares. Barring any specific instructions, the brokerage firm will report the cost basis using the higher cost block of stock first.

David gave property with a basis of $133,000 to Hannah when the property had a FMV of $100,000 and paid gift taxes of $8,000. If Hannah later sells the property for $140,000, Hannah's basis (to determine gain) in the property immediately before the sale is

Unless the alternate valuation date is elected, the basis of property received from a decedent is generally the property's fair market value at the date of decedent's death.

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