Question 1

Confusingly, §1221 defines what is not a capital asset.

Accepted Answer

A) True 
 B)False

Question 2

Property is acquired in a qualifying like-kind exchange.The acquired property is sold three months after it is acquired.Which of the following is correct?

Accepted Answer

A) Since the holding period of the property given up in the exchange "tacks" to the holding period of the acquired property, the holding period of the acquired property could be long-term. 
B) The holding period of the acquired property is short-term. 
C) The holding period of property acquired in a like-kind exchange is always long-term. 
D) When property acquired in a like-kind exchange is disposed of, the holding period is not relevant. 
E) None of the above. 
A) Since the holding period of the property given up in the exchange "tacks" to the holding period of the acquired property, the holding period of the acquired property could be long-term. 
B) The holding period of the acquired property is short-term. 
C) The holding period of property acquired in a like-kind exchange is always long-term. 
D) When property acquired in a like-kind exchange is disposed of, the holding period is not relevant. 
E) None of the above.

Question 3

Cason is filing as single and has 2018 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long- term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

Accepted Answer

A) $0 
B) $200 
C) $300 
D) $4,924 
E) None of the above 
A) $0 
B) $200 
C) $300 
D) $4,924 
E) None of the above

Question 4

An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating.The taxpayer immediately sells the note to a bank for less than the note's stated value.The taxpayer has an ordinary loss.

Accepted Answer

A) True 
 B)False

Question 5

Individuals who are not professional real estate developers may get capital gain treatment for sale of their real property if they engage only in limited development activities.

Accepted Answer

A) True 
 B)False

Question 6

Stella purchased vacant land in 2011 that she subdivided for resale as lots.All 10 of the lots were sold during 2018.The lots had a tax basis of $12,000 each and sold for $35,000 each.Stella made no substantial improvements to the lots.She acted as her own real estate broker; so there were no sales expenses for selling the lots.Which of the following statements is correct?

Accepted Answer

A) Stella must hold the lots for at least 10 years before she is eligible for the special capital gain treatment of § 1237. 
B) The $230,000 gain from the sale of the ten lots is all ordinary income. 
C) All of the $230,000 gain from the sale of the ten lots is long-term capital gain. 
D) To be eligible for the special capital gain treatment of § 1237, Stella must be a real estate dealer. 
E) None of the above. 
A) Stella must hold the lots for at least 10 years before she is eligible for the special capital gain treatment of § 1237. 
B) The $230,000 gain from the sale of the ten lots is all ordinary income. 
C) All of the $230,000 gain from the sale of the ten lots is long-term capital gain. 
D) To be eligible for the special capital gain treatment of § 1237, Stella must be a real estate dealer. 
E) None of the above.

Question 7

Section 1231 applies to the sale or exchange of business properties, but not to personal use activity casualties.

Accepted Answer

A) True 
 B)False

Question 8

Tom has owned 40 shares of Orange Corporation stock for five years.He sells the stock short for a total of $1,100.One month later, he closes the short sale by purchasing and delivering 40 shares of Orange Corporation stock for a total of $600.Tom has a $500 short-term capital gain.

Accepted Answer

A) True 
 B)False

Question 9

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017.For 2018, Vertical's net § 1231 gain is treated as:

Accepted Answer

A) $45,000 long-term capital gain and $22,000 ordinary loss. 
B) $67,000 ordinary gain. 
C) $45,000 long-term capital gain and $22,000 ordinary gain. 
D) $67,000 capital gain. 
E) None of the above. 
A) $45,000 long-term capital gain and $22,000 ordinary loss. 
B) $67,000 ordinary gain. 
C) $45,000 long-term capital gain and $22,000 ordinary gain. 
D) $67,000 capital gain. 
E) None of the above.

Confusingly, §1221 defines what is not a capital asset.

Property is acquired in a qualifying like-kind exchange.The acquired property is sold three months after it is acquired.Which of the following is correct?

Cason is filing as single and has 2018 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long- term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating.The taxpayer immediately sells the note to a bank for less than the note's stated value.The taxpayer has an ordinary loss.

Individuals who are not professional real estate developers may get capital gain treatment for sale of their real property if they engage only in limited development activities.

Section 1231 applies to the sale or exchange of business properties, but not to personal use activity casualties.

Tom has owned 40 shares of Orange Corporation stock for five years.He sells the stock short for a total of $1,100.One month later, he closes the short sale by purchasing and delivering 40 shares of Orange Corporation stock for a total of $600.Tom has a $500 short-term capital gain.

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017.For 2018, Vertical's net § 1231 gain is treated as:

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 Exchanges

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and the Alternative Minimum Tax

Comparative Forms of Doing Business

Filters

Exam 8: Property Transactions: Capital Gains and Losses

Confusingly, §1221 defines what is not a capital asset.

Property is acquired in a qualifying like-kind exchange.The acquired property is sold three months after it is acquired.Which of the following is correct?

Cason is filing as single and has 2018 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long- term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating.The taxpayer immediately sells the note to a bank for less than the note's stated value.The taxpayer has an ordinary loss.

Individuals who are not professional real estate developers may get capital gain treatment for sale of their real property if they engage only in limited development activities.

Section 1231 applies to the sale or exchange of business properties, but not to personal use activity casualties.

Tom has owned 40 shares of Orange Corporation stock for five years.He sells the stock short for a total of $1,100.One month later, he closes the short sale by purchasing and delivering 40 shares of Orange Corporation stock for a total of $600.Tom has a $500 short-term capital gain.

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017.For 2018, Vertical's net § 1231 gain is treated as:

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 Exchanges

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and the Alternative Minimum Tax

Comparative Forms of Doing Business

Filters