Exam 8: Property Transactions: Capital Gains and Losses

A personal use property casualty loss that occurs in a non federally declared disaster area is deductible only to the extent it exceeds 10% of AGI.

Which of the following is correct?

Section 1245 depreciation recapture potential does not carryover from a deceased taxpayer to the beneficiary taxpayer.

Gold Company signs a 13-year franchise agreement with Silver.Silver retained significant powers, rights, and a continuing interest.Gold Company the franchisee) makes noncontingent payments of $18,000 per year for the first four years of the franchise.Gold Company also pays a contingent fee of 2% of gross sales every month.Which of the following statements is correct?

A worthless security had a holding period of 6 months when it became worthless on December 10, 2018.The investor who had owned the security had a basis of $20,000 for it.Which of the following statements is correct?

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

Since the Code section that defines "capital asset" says what is not a capital asset, other Code sections have to help determine what is and what is not a capital gain or loss.

The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

Which of the following would extinguish the § 1245 recapture potential?

An individual taxpayer received a valuable painting from his uncle, a famous painter.The painter created the painting.After the taxpayer held the painting for two years, he sold it for a $400,000 gain.The gain is a long-term capital gain.

In 2018, an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain.Which of the following statements is correct?

Blue Company sold machinery for $45,000 on December 23, 2018.The machinery had been acquired on April 1, 2016, for $69,000 and its adjusted basis was $34,200.The § 1231 gain, § 1245 recapture gain, and § 1231 loss from this transaction are:

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital 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.

Nonrecaptured § 1231 losses from the six prior tax years may cause current year net § 1231 gain to be treated as ordinary income.

Short-term capital losses are netted against long-term capital gains and long-term capital losses are netted against short-term capital gains.

On June 1, 2018, Brady purchased an option to buy 1,000 shares of General, Inc.at $40 per share.He purchased the option for $3,000.It was to remain in effect for five months.The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2018.On his 2018 tax return, what should Brady report?

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.

Verway, Inc., has a 2018 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2016.For 2018, Verway's net § 1231 gain is treated as:

If a capital asset is sold at a gain, the holding period is important.