Question 1

Which of the following comparisons is correct?

Accepted Answer

A) Corporations may carryback capital losses; individuals may not. 
B) Both corporation and individual long-term capital losses carryover as short-term capital losses. 
C) Corporations may carryforward capital losses indefinitely; individuals may only carryforward capital losses for five years. 
D) Both corporations and individuals may use an alternative tax rate on net capital gains. 
E) None of the above. 
A) Corporations may carryback capital losses; individuals may not. 
B) Both corporation and individual long-term capital losses carryover as short-term capital losses. 
C) Corporations may carryforward capital losses indefinitely; individuals may only carryforward capital losses for five years. 
D) Both corporations and individuals may use an alternative tax rate on net capital gains. 
E) None of the above.

Question 2

Which of the following statements is correct?

Accepted Answer

A) When depreciable property is gifted to another individual taxpayer,the depreciation recapture potential is extinguished. 
B) When depreciable property is inherited by a taxpayer,the depreciation recapture potential is extinguished. 
C) When corporate depreciable property is distributed as a dividend,the depreciation recapture potential is generally not recognized. 
D) When depreciable property is contributed to charity,the depreciation recapture potential has no effect on the amount of the charitable contribution deduction. 
E) All of the above are correct. 
A) When depreciable property is gifted to another individual taxpayer,the depreciation recapture potential is extinguished. 
B) When depreciable property is inherited by a taxpayer,the depreciation recapture potential is extinguished. 
C) When corporate depreciable property is distributed as a dividend,the depreciation recapture potential is generally not recognized. 
D) When depreciable property is contributed to charity,the depreciation recapture potential has no effect on the amount of the charitable contribution deduction. 
E) All of the above are correct.

Question 3

A net short-term capital loss first offsets any 28% net long-term capital gain before it offsets either 25% net long-term capital gain or 0%/15%/20% net long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 4

All collectibles short-term gain is subject to a potential alternative tax rate of 28%.

Accepted Answer

A) True 
 B)False

Question 5

Betty,a single taxpayer with no dependents,has the gains and losses shown below.Before considering these transactions,Betty has $45,000 of other taxable income.What is the treatment of the gains and losses and what is Betty's taxable income?

Accepted Answer

The § 1245 recapture gains are combined

Question 6

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

Accepted Answer

A) True 
 B)False

Question 7

The only things that the grantee of an option may do with the option are exercise it or let it expire.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct concerning short sales of stock?

Accepted Answer

A) At the time the short sale is made,the taxpayer does not deliver to the purchaser the shares sold short. 
B) At the time the short sale is made,the taxpayer delivers to the purchaser the shares sold short. 
C) At the time the short sale is made,the taxpayer may already own the shares sold short. 
D) At the time the short sale is made,the taxpayer always already owns the shares sold short. 
E) None of the above. 
A) At the time the short sale is made,the taxpayer does not deliver to the purchaser the shares sold short. 
B) At the time the short sale is made,the taxpayer delivers to the purchaser the shares sold short. 
C) At the time the short sale is made,the taxpayer may already own the shares sold short. 
D) At the time the short sale is made,the taxpayer always already owns the shares sold short. 
E) None of the above.

Question 9

Which of the following assets held by a manufacturing business is a § 1231 asset?

Accepted Answer

A) Inventory. 
B) Office furniture used in the business and held less than one year. 
C) A factory building used in the business and held more than one year. 
D) Accounts receivable. 
E) All of the above. 
A) Inventory. 
B) Office furniture used in the business and held less than one year. 
C) A factory building used in the business and held more than one year. 
D) Accounts receivable. 
E) All of the above.

Question 10

Hank inherited Green stock from his mother when she died.The mother had a tax basis of $366,000 for the Green stock when she died and the Green stock was worth $437,000 at the date of her death.Which of the statements below is correct?

Accepted Answer

A) Hank's holding period for the Green stock includes his mother's holding period for the stock. 
B) Hank's holding period for the Green stock does not include his mother's holding period for the stock. 
C) Hank's holding period for the Green stock is automatically long term. 
D) b.and c. 
E) None of the above. 
A) Hank's holding period for the Green stock includes his mother's holding period for the stock. 
B) Hank's holding period for the Green stock does not include his mother's holding period for the stock. 
C) Hank's holding period for the Green stock is automatically long term. 
D) b.and c. 
E) None of the above.

Question 11

Phil's father died on January 10,2013.The father had owned stock for 20 years with a basis of $45,000 that was transferred to Phil as a gift on August 10,2012,when the stock was worth $430,000.His father paid gift tax of $31,000.This stock was worth $566,000 at the date of the father's death.Phil sold the stock for $545,000 net of commissions on February 23,2013.What is the amount and nature of Phil's gain or loss from disposition of this property?

Accepted Answer

Phil had a tax basis for the stock equal

Question 12

Charmine,Inc.has already incurred a $10,000 § 1231 gain in 2013 and has no § 1231 lookback losses.The taxpayer purchased a business machine for $100,000 five years ago,$70,000 of depreciation has been taken on it,and the machine is now worth $90,000.How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine,Inc.already has $322,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses,what is taxable income?

Accepted Answer

The current year § 1231 gain will not be

Question 13

The § 1245 depreciation recapture potential does not reduce the amount of the charitable contribution deduction under § 170.

Accepted Answer

A) True 
 B)False

Question 14

The tax law requires that capital gains and losses be separated from other types of gains and losses.Among the reasons for this treatment are:

Accepted Answer

A) Long-term capital gains may be taxed at a lower rate than ordinary gains. 
B) Capital losses that are short-term are not deductible. 
C) Net capital loss is deductible only up to $3,000 per year for individual taxpayers. 
D) a.and c. 
E) None of the above. 
A) Long-term capital gains may be taxed at a lower rate than ordinary gains. 
B) Capital losses that are short-term are not deductible. 
C) Net capital loss is deductible only up to $3,000 per year for individual taxpayers. 
D) a.and c. 
E) None of the above.

Question 15

Section 1245 may apply to amortizable § 197 intangible assets.

Accepted Answer

A) True 
 B)False

Question 16

Michael is in the business of creating posters (display art)for the movie industry.He creates a poster and sells it for a lump sum.He has:

Accepted Answer

A) Sold a capital asset. 
B) Sold an ordinary asset. 
C) No gain or loss. 
D) An ordinary gain. 
E) b.and d. 
A) Sold a capital asset. 
B) Sold an ordinary asset. 
C) No gain or loss. 
D) An ordinary gain. 
E) b.and d.

Question 17

In the "General Procedure for § 1231 Computation: Step 2.§ 1231 Netting," if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Accepted Answer

A) True 
 B)False

Question 18

Section 1231 property generally includes certain purchased intangible assets (such as patents and goodwill)that are eligible for amortization and held for more than one year.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following assets held by a cash basis accounting firm is a § 1231 asset?

Accepted Answer

A) An account receivable from a client. 
B) A desk used in the business and held more than one year. 
C) An investment in Orange Company common stock. 
D) A computer used in the business,held more than one year,but fully depreciated under § 179 when acquired. 
E) b.and d. 
A) An account receivable from a client. 
B) A desk used in the business and held more than one year. 
C) An investment in Orange Company common stock. 
D) A computer used in the business,held more than one year,but fully depreciated under § 179 when acquired. 
E) b.and d.

Question 20

An individual has a $40,000 § 1245 gain,a $35,000 § 1231 gain,a $33,000 § 1231 loss,a $3,000 § 1231 lookback loss,and a $15,000 long-term capital gain.The net long-term capital gain is:

Accepted Answer

A) $30,000. 
B) $40,000. 
C) $17,000. 
D) $15,000. 
E) None of the above. 
A) $30,000. 
B) $40,000. 
C) $17,000. 
D) $15,000. 
E) None of the above.

Which of the following comparisons is correct?

Which of the following statements is correct?

A net short-term capital loss first offsets any 28% net long-term capital gain before it offsets either 25% net long-term capital gain or 0%/15%/20% net long-term capital gain.

All collectibles short-term gain is subject to a potential alternative tax rate of 28%.

Betty,a single taxpayer with no dependents,has the gains and losses shown below.Before considering these transactions,Betty has $45,000 of other taxable income.What is the treatment of the gains and losses and what is Betty's taxable income?

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

The only things that the grantee of an option may do with the option are exercise it or let it expire.

Which of the following is correct concerning short sales of stock?

Which of the following assets held by a manufacturing business is a § 1231 asset?

Hank inherited Green stock from his mother when she died.The mother had a tax basis of $366,000 for the Green stock when she died and the Green stock was worth $437,000 at the date of her death.Which of the statements below is correct?

The § 1245 depreciation recapture potential does not reduce the amount of the charitable contribution deduction under § 170.

The tax law requires that capital gains and losses be separated from other types of gains and losses.Among the reasons for this treatment are:

Section 1245 may apply to amortizable § 197 intangible assets.

Michael is in the business of creating posters (display art)for the movie industry.He creates a poster and sells it for a lump sum.He has:

In the "General Procedure for § 1231 Computation: Step 2.§ 1231 Netting," if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Section 1231 property generally includes certain purchased intangible assets (such as patents and goodwill)that are eligible for amortization and held for more than one year.

Which of the following assets held by a cash basis accounting firm is a § 1231 asset?

An individual has a $40,000 § 1245 gain,a $35,000 § 1231 gain,a $33,000 § 1231 loss,a $3,000 § 1231 lookback loss,and a $15,000 long-term capital gain.The net long-term capital gain is:

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, gain and Loss, and Nontaxable Exchange

Corporations: Organization, capital Structure, and Operating Rules

Corporations: Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and Corporate Alternative Minimum Tax

Comparative Forms of Doing Business

Introduction to the Taxation of Individuals

Individuals As Employees and Proprietors

Filters

Exam 8: Property Transactions: Capital Gains and Losses, section 1231, and Recapture Provisions

Which of the following comparisons is correct?

Which of the following statements is correct?

A net short-term capital loss first offsets any 28% net long-term capital gain before it offsets either 25% net long-term capital gain or 0%/15%/20% net long-term capital gain.

All collectibles short-term gain is subject to a potential alternative tax rate of 28%.

Betty,a single taxpayer with no dependents,has the gains and losses shown below.Before considering these transactions,Betty has $45,000 of other taxable income.What is the treatment of the gains and losses and what is Betty's taxable income?

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

The only things that the grantee of an option may do with the option are exercise it or let it expire.

Which of the following is correct concerning short sales of stock?

Which of the following assets held by a manufacturing business is a § 1231 asset?

Hank inherited Green stock from his mother when she died.The mother had a tax basis of $366,000 for the Green stock when she died and the Green stock was worth $437,000 at the date of her death.Which of the statements below is correct?

The § 1245 depreciation recapture potential does not reduce the amount of the charitable contribution deduction under § 170.

The tax law requires that capital gains and losses be separated from other types of gains and losses.Among the reasons for this treatment are:

Section 1245 may apply to amortizable § 197 intangible assets.

Michael is in the business of creating posters (display art)for the movie industry.He creates a poster and sells it for a lump sum.He has:

In the "General Procedure for § 1231 Computation: Step 2.§ 1231 Netting," if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Section 1231 property generally includes certain purchased intangible assets (such as patents and goodwill)that are eligible for amortization and held for more than one year.

Which of the following assets held by a cash basis accounting firm is a § 1231 asset?

An individual has a $40,000 § 1245 gain,a $35,000 § 1231 gain,a $33,000 § 1231 loss,a $3,000 § 1231 lookback loss,and a $15,000 long-term capital gain.The net long-term capital gain is:

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, gain and Loss, and Nontaxable Exchange

Corporations: Organization, capital Structure, and Operating Rules

Corporations: Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and Corporate Alternative Minimum Tax

Comparative Forms of Doing Business

Introduction to the Taxation of Individuals

Individuals As Employees and Proprietors

Filters