Exam 21: Property Transactions: Capital Gains and Losses

Everest Inc.reports taxable income of $900,000 before considering sales of stock.Everest Inc.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?

On January 31 of the current year,Sophia pays $1,000 for an option to acquire 100 shares of Texas Corporation common stock for $105 per share at any time prior to December 31.As of December 31,Sophia had not exercised the option or sold it.Which of the following statements is correct?

A taxpayer sells a patent on a new algorithm for a gain.Which taxpayer will be allowed capital gain treatment for the sale? Assume that the patent had not been placed in service as of the acquisition date.

Sachi is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2019 for $20,000.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

Olivia,a single taxpayer,has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Joycelyn gave a diamond necklace to her granddaughter Emma.Joycelyn had purchased the necklace in 1980 for $20,000.The FMV of the necklace at the time of the gift was $50,000.After deducting the annual exclusion,the amount of the gift was $35,000.Gift taxes of $10,000 were paid.What is Emma's adjusted basis in the necklace?

On July 25,2018,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 18,2018.Darryl sold the stock on April 18,2019 for $7,800.As a result of the sale,what will Darryl report on his 2019 tax return?

In the current year,ABC Corporation had the following items of income,expense,gains,and losses: Sales \ 500,000 Cost of sales 270,000 Operating expenses 100,000 Interest on savings account 14,000 Gain on sale of AT\&T stock 6,000 Loss on sale of IBM stock 15,000 What is taxable income for the year?

Which one of the following does not affect the adjusted basis of a house held as rental property?

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.

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

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

Stock purchased on December 15,2018,which becomes worthless in March 2019,produces a STCL since the holding period is one year or less.

Taj Corporation has started construction of a new mall with a cost estimate of $50 million.The mall is expected to be ready to open in 18 months.Taj cannot deduct the interest expense on the construction loan.

If an individual 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.

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

Which of the following is not a capital asset?

All recognized gains and losses must eventually be classified either as capital or ordinary.

Margaret died on September 16,2019,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 19,2019 for $67,000.What is Caroline's reported gain on this sale?

Billy and Sue are married and live in Texas,a community property state.They jointly own real property with an adjusted basis of $200,000.When the property has a FMV of $450,000,Billy dies leaving all of the property to Sue.If she later sells the property for $650,000,what is Sue's gain on the sale?