Exam 5: Property Transactions: Capital Gains and Losses

Jack exchanged land with an adjusted basis of $65,000 subject to a liability of $22,000 for $50,000 (FMV) of stock owned by Hayden. Hayden takes the land subject to the liability. Jack incurs $500 of selling expenses. What is the amount of Jack's realized gain on the exchange?

Renee is single and has taxable income of $480,000 without considering the sale of a capital asset (land held for investment) in September of 2015 for $25,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain (without consideration of the additional Medicare tax) is

All realized gains and losses are recognized for tax purposes.

Normally, a security dealer reports ordinary income on the sale of securities unless it is specifically identified as a security being held for investment.

Emma Grace acquires three machines for $80,000, which have FMVs of $32,000, $28,000, and $20,000 respectively. The delivery cost is $500, and installation costs amount to $2,500. What is the basis of each machine?

The gain or loss on an asset purchased on March 31, 2014, and sold on March 31, 2015, is classified as short-term.

Everest Inc. is a corporation in the 35% marginal tax bracket. It sold two stockholdings this year, resulting in a long-term capital gain of $15,000 on stock A and a short-term capital loss of $5,000 on stock B. What is the extra tax that Everest will pay due to the sales of these stocks?

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?

Jade is a single taxpayer in the top tax bracket, with salary of $450,000 and investment income of $100,000. She is considering the sale of some shares of stock which will result in a $50,000. She purchased the shares three years ago. Taking all taxes into account, how much tax will she pay due to this gain?

Gain on sale of a patent by an inventor generally is ordinary income.

Rachel holds 110 shares of Argon Mutual Fund. She is planning to sell 90 shares. Her record of the share purchases is noted below. What could be her basis for the 90 shares to be sold for purposes of determining gain?

Rana purchases a 5%, $100,000 corporate bond at issuance on January 1, 2015 for $91,500. The bond matures in five years. In 2015 Rana will recognize interest income of

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?

During the current year, Don's aunt Natalie gave him a house. At the time of the gift, the house had a FMV of $144,000 and his aunt's adjusted basis was $133,000. After deducting the annual exclusion, the amount of the gift was $130,000. His aunt paid a gift tax of $20,000 on the house. What is Don's basis in the house for purposes of determining gain?

Interest incurred during the development and manufacture of a machine must be capitalized.

Antonio is single and has taxable income of $150,000 without considering the sale of a capital asset (land held for investment) in September of 2015 for $25,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain (without consideration of the additional Medicare tax) is

Donald has retired from his job as a corporate manager. He buys and sells stocks on a daily basis. He spends 8-9 hours daily studying prospective stock purchases and market news. What tax issues should Donald consider?

Gains and losses are recognized when property is disposed of by gift or bequest.

Richard exchanges a building with a basis of $35,000, and subject to a liability of $25,000, for land with a FMV of $50,000 owned by Bill. Bill takes the building subject to the liability. What is the amount of Richard's realized gain?

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock. Abra Corporation will pay taxes on $97,000 of taxable income.