Kendrick,whose tax rate is 32%,had the following results from transactions during the year: \[\begin{array} { | l | r | } \hline \text { Collectibles gain } & \$ 20,000 \\ \hline \text { Short-term capital loss } & 4,000 \\ \hline \text { Long-term capital gain } & 8,000 \\ \hline \end{array}\] After offsetting the STCL,what is (are)the resulting gain(s)?

A) $16,000 collectibles gain,$8,000 LTCG B) $20,000 collectibles gain,$4,000 LTCG C) $24,000 LTCG D) $20,000 collectibles gain,$8,000 LTCG A) $16,000 collectibles gain,$8,000 LTCG B) $20,000 collectibles gain,$4,000 LTCG C) $24,000 LTCG D) $20,000 collectibles gain,$8,000 LTCG

Terra Corp.purchased a new enterprise software system and incurred the following costs: \[\begin{array} { | l | r | } \hline \text { Cost of the system } & \$ 800,000 \\ \hline \text { Installation of system } & 5,000 \\ \hline \text { Testing of system } & 6,000 \\ \hline \text { Initial training of employees } & 9,000 \\ \hline \end{array}\] What is Terra Corp.'s basis in the software system?

A) $800,000 B) $805,000 C) $811,000 D) $820,000 A) $800,000 B) $805,000 C) $811,000 D) $820,000

Exam 21: Property Transactions: Capital Gains and Losses

Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be

(Multiple Choice)

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Question 21

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

(Multiple Choice)

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Question 22

A taxpayer reports capital gains and losses on

(Multiple Choice)

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Question 23

Kendrick,whose tax rate is 32%,had the following results from transactions during the year: Collectibles gain \ 20,000 Short-term capital loss 4,000 Long-term capital gain 8,000 After offsetting the STCL,what is (are)the resulting gain(s)?

(Multiple Choice)

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Question 24

An uncle gifts a parcel of land to his niece,and he has to pay $25,000 of gift taxes.The land has appreciated substantially since he purchased it 20 year ago.The niece's basis in the land will be the uncle's cost increased by the $25,000 of gift taxes paid by the uncle.

(True/False)

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Question 25

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

(Multiple Choice)

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Question 26

Terra Corp.purchased a new enterprise software system and incurred the following costs: Cost of the system \ 800,000 Installation of system 5,000 Testing of system 6,000 Initial training of employees 9,000 What is Terra Corp.'s basis in the software system?

(Multiple Choice)

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Question 27

On January 31 of this year,Jennifer pays $700 for an option to acquire 100 shares of Lifetime Corporation common stock for $70 per share.Jennifer exercises the option on June 2.Jennifer sells the stock on April 30 of next year for $10,000.Jennifer's basis for the stock immediately before the sale is

(Multiple Choice)

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Question 28

Which one of the following is a capital asset?

(Multiple Choice)

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Question 29

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.

(True/False)

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Question 30

The gain or loss on an asset purchased on March 31,2018,and sold on March 31,2019,is classified as short-term.

(True/False)

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Question 31

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?

(Multiple Choice)

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Question 32

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.

(True/False)

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Question 33

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

(Multiple Choice)

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Question 34

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

(Multiple Choice)

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Question 35

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

(Multiple Choice)

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Question 36

Capital recoveries increase the adjusted basis of an asset.

(True/False)

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Question 37

All of the following are capital assets with the exception of

(Multiple Choice)

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Question 38

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.

(True/False)

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Question 39

Harwood Company purchased an office building for $5,000,000 cash on April 1.Prior to renting it out to tenants on July 1,Harwood spent $1,000,000 on materials and labor to renovate the property.It funded $100,000 of the renovation cost with its own funds and borrowed the remaining $900,000.As of July 1,$10,000 of interest had been paid to the bank,but none of the principal had been repaid.The basis of the building on July 1 is

(Multiple Choice)

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Question 40

Showing 21 - 40 of 136

Exam 21: Property Transactions: Capital Gains and Losses

Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be

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

A taxpayer reports capital gains and losses on

Kendrick,whose tax rate is 32%,had the following results from transactions during the year: Collectibles gain \ 20,000 Short-term capital loss 4,000 Long-term capital gain 8,000 After offsetting the STCL,what is (are)the resulting gain(s)?

An uncle gifts a parcel of land to his niece,and he has to pay $25,000 of gift taxes.The land has appreciated substantially since he purchased it 20 year ago.The niece's basis in the land will be the uncle's cost increased by the $25,000 of gift taxes paid by the uncle.

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

Terra Corp.purchased a new enterprise software system and incurred the following costs: Cost of the system \ 800,000 Installation of system 5,000 Testing of system 6,000 Initial training of employees 9,000 What is Terra Corp.'s basis in the software system?

Which one of the following is a capital asset?

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.

The gain or loss on an asset purchased on March 31,2018,and sold on March 31,2019,is classified as short-term.

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?

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.

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

Capital recoveries increase the adjusted basis of an asset.

All of the following are capital assets with the exception of

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.

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