Question 1

The following is true if land is sold except:

Accepted Answer

A) The gain on the sale of land used in a business is recorded on Form 4797. 
B) The gain on the sale of land used in a business is recorded on Schedule D. 
C) The gain on the sale of land used in a business is ordinary income and can appear on a Schedule C if it is owned by a sole proprietor. 
D) The gain on the sale of land appears on the Form 1040 under the heading "other income". 
A) The gain on the sale of land used in a business is recorded on Form 4797. 
B) The gain on the sale of land used in a business is recorded on Schedule D. 
C) The gain on the sale of land used in a business is ordinary income and can appear on a Schedule C if it is owned by a sole proprietor. 
D) The gain on the sale of land appears on the Form 1040 under the heading "other income".

Question 2

Beatrice,a single taxpayer,has W-2 income of $93,700.She also has a short-term capital loss of $7,000,a short-term capital gain of $1,000,and a long-term capital gain of $2,000.What is Yolanda's AGI for 2017?

Accepted Answer

A) $96,750. 
B) $90,700. 
C) $90,750. 
D) $89,750. 
A) $96,750. 
B) $90,700. 
C) $90,750. 
D) $89,750.

Question 3

Keeley purchased 1,000 shares in FAM Inc. ,for $10,000 on December 19,2016.The company went bankrupt on July 10,2017 with no hope of recovery for the shareholders.
a.On what date is the stock deemed to be worthless?
b.What is the nature of the loss?

Accepted Answer

a.December

Question 4

Heidi invested in a mid-sized local company with gross assets of $17,000,000.Heidi purchased 2,000 shares for $44,000 in 2000.In 2017,Heidi sold the stock for $84,000.How is the gain treated for tax purposes?

Accepted Answer

A) $40,000 capital gain and taxed at preferential rates. 
B) $20,000 excluded from gross income under Section 1202 with the remaining gain recognized and taxed at regular rates. 
C) $20,000 excluded from gross income under Section 1202 and $20,000 taxed at 28%. 
D) $20,000 excluded from gross income under Section 1202 and $20,000 taxed at preferential capital gains rates. 
A) $40,000 capital gain and taxed at preferential rates. 
B) $20,000 excluded from gross income under Section 1202 with the remaining gain recognized and taxed at regular rates. 
C) $20,000 excluded from gross income under Section 1202 and $20,000 taxed at 28%. 
D) $20,000 excluded from gross income under Section 1202 and $20,000 taxed at preferential capital gains rates.

Question 5

Currently,the maximum long term capital gain rate applied to a taxpayer in the 15% regular tax bracket is 0%.

Accepted Answer

A) True 
 B)False

Question 6

Before the tax implications of asset sales can be determined,which of the following must be determined?

Accepted Answer

A) assets must be classified as either personal,trade or business,or investment assets. 
B) the length of time the taxpayer owned the property. 
C) whether the assets are subject to depreciation. 
D) all of these. 
A) assets must be classified as either personal,trade or business,or investment assets. 
B) the length of time the taxpayer owned the property. 
C) whether the assets are subject to depreciation. 
D) all of these.

Question 7

Jim,the owner of a sole proprietorship,sold the following assets in 2017:
 $\begin{array}{lrrrr}\text { Asset }&\text { Cost }&\text { Acquired }&\text { Depreciation }&\text { Sale Price }&\text { Sale Date }\
\text { Truck }&\$48,000&07/31/15&\$7,737&\$35,000&07/22/17\\text { Trailer }&31,000&12/15/15&19,096&24,000&05/30/17\\text { Land }&\$67,000&02/15/15&0&75,000&06/30/17
\end{array}$ Complete the following table: and the character of the realized and recognized gain or loss from the sale of each asset.Assume the land was held for investment and had a FMV of $73,000.
 $\begin{array}{lllccc}&&&&\text { Amount }&\text { The gain (loss) }\
&&&\text { Section }&\text { subject to }&\text { is considered }\
&&&1231 \text { or }&\text { Section }&\text { to be ordinary }\
& \text { Adjusted} & \text {Gain (Loss) } & 1245 & 1245 & \text { capital for tax } \
\text { Asset } & \text { Basis } & \text { Recognized } & \text { Asset } & \text { Recapture }&\text { purposes } \\hline
\end{array}$

Accepted Answer

The answer of Jim,the owner of a sole proprietorship,sold the...

Question 8

Sammy sells a piece of specialized equipment (with a high resale value)used in his business for $41,650 on September 10,2017.The equipment was purchased on May 20,2014 for $32,000.Sammy has taken $9,200 of depreciation on the equipment.What are the amount and classification of the gain on the sale by Sammy?

Accepted Answer

A) $18,850 Section 1231 gain. 
B) $9,200 Section 1231 gain and $9,650 Section 1245 ordinary income. 
C) $9,200 ordinary income under Section 1250 and $9,650 Section 1231 gain. 
D) $9,200 ordinary income under Section 1245 and $9,650 Section 1231 gain. 
A) $18,850 Section 1231 gain. 
B) $9,200 Section 1231 gain and $9,650 Section 1245 ordinary income. 
C) $9,200 ordinary income under Section 1250 and $9,650 Section 1231 gain. 
D) $9,200 ordinary income under Section 1245 and $9,650 Section 1231 gain.

Question 9

Josephine gave her son,Shane 700 shares of Creative Marketing Inc. ,common stock on May 26,2016.Josephine originally paid $9,000 for the stock on April 15,2016.At the date of the gift,the fair market value of the stock was $8,500.If no gift tax is paid and Shane sells the stock for $5,500 on May 26,2017,he will recognize:

Accepted Answer

A) a short-term capital loss. 
B) a long-term capital loss. 
C) an ordinary loss. 
D) no loss because Josephine already recognized the loss when she gave the stock to Shane. 
A) a short-term capital loss. 
B) a long-term capital loss. 
C) an ordinary loss. 
D) no loss because Josephine already recognized the loss when she gave the stock to Shane.

Question 10

Francisco sells a parcel of land for $100,000 cash and the buyer also assumes Francisco's liability of $10,000.The basis of his land is $70,000.What is the gain or loss realized on the sale?

Accepted Answer

A) $10,000 gain. 
B) $20,000 gain. 
C) $30,000 gain. 
D) $40,000 gain. 
A) $10,000 gain. 
B) $20,000 gain. 
C) $30,000 gain. 
D) $40,000 gain.

Question 11

Respond to the following independent situations:
a.Rosalva and Francisco,husband and wife,filing jointly,earn $475,000 in salaries and do not have any net investment income.
How much in surtax will Rosalva and Francisco be assessed on their Form 1040 for 2017?
b.Rosalva and Francisco,husband and wife,filing jointly,earn $325,000 in salaries and $60,000 in capital gains,$40,000 in dividends,for a total MAGI of $375,000.
How much in surtax will Rosalva and Francisco be assessed on their Form 1040 for 2017?
c.Rosalva and Francisco,husband and wife,filing jointly earn $330,000 in income including $100,000 in capital gains.
How much in surtax will Marie and Jim be assessed on their Form 1040 for 2017?

Accepted Answer

a.$0.
b.$3

Question 12

Otis bought a 2-unit apartment building in July 2010 for $330,000 and sold it for $400,000 on December 20,2017.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Accepted Answer

A) $0. 
B) $70,000. 
C) $83,493. 
D) $153,493. 
A) $0. 
B) $70,000. 
C) $83,493. 
D) $153,493.

Question 13

Gabriella,a single taxpayer,has wage income of $160,000.In addition,she has $7,000 in long-term capital losses,$1,000 in long-term capital gains,$3,000 in short-term capital gains,and $1,000 in short-term losses.What is Gabriella's AGI for 2017?

Accepted Answer

A) $156,000. 
B) $157,000. 
C) $160,000. 
D) $161,000. 
A) $156,000. 
B) $157,000. 
C) $160,000. 
D) $161,000.

Question 14

Property owned by a taxpayer and used either for personal purposes,investment,or in a trade or business is a capital asset.

Accepted Answer

A) True 
 B)False

Question 15

Aneta sold an apartment building for $713,470 in 2017.She purchased the building in 2011 for $600,000 and has taken $151,806 in depreciation on the building.Assuming Aneta is in the 33% tax bracket,how is her gain taxed?

Accepted Answer

A) $113,470 at 0% and $151,806 at 28%. 
B) $113,470 at 25% and $151,806 at 15%. 
C) $151,806 at 28% and $113,470 at 15%. 
D) $151,806 at 25% and $113,470 at 15%. 
A) $113,470 at 0% and $151,806 at 28%. 
B) $113,470 at 25% and $151,806 at 15%. 
C) $151,806 at 28% and $113,470 at 15%. 
D) $151,806 at 25% and $113,470 at 15%.

Question 16

Tanisha buys a sculpture from a collector for resale in her gallery for $8,400.She sold it 15 months later for $12,500.What are the nature and amount of the gain on the sale of the sculpture?

Accepted Answer

A) $4,100 Section 1245 gain. 
B) $4,100 ordinary income. 
C) $4,100 Section 1231 gain. 
D) $4,100 gain subject to 28% collectibles tax rate. 
A) $4,100 Section 1245 gain. 
B) $4,100 ordinary income. 
C) $4,100 Section 1231 gain. 
D) $4,100 gain subject to 28% collectibles tax rate.

Question 17

Unused capital losses in any one year carry forward indefinitely to offset any future short-term or long-term gains.

Accepted Answer

A) True 
 B)False

Question 18

In 2016,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock: $\begin{array}{ll}
2011 & 275 \text { shares@ } \$ 50 \text { per share } \
2012 & 125 \text { shares@ } \$ 48 \text { per share } \
2013 & 100 \text { shares@ } \$ 55 \text { per share }
\end{array}$ Assuming Daryl uses the single category average cost method,he will realize:

Accepted Answer

A) $1,750.00 long-term loss. 
B) $2,200.00 long-term loss. 
C) $3,125.00 long-term loss. 
D) $3,462.50 long-term loss. 
A) $1,750.00 long-term loss. 
B) $2,200.00 long-term loss. 
C) $3,125.00 long-term loss. 
D) $3,462.50 long-term loss.

Question 19

Which of the following is Section 1231 property?

Accepted Answer

A) Inventory. 
B) Copyright owned by the author. 
C) A building used in a trade or business,held for more than one year 
D) Accounts receivable. 
A) Inventory. 
B) Copyright owned by the author. 
C) A building used in a trade or business,held for more than one year 
D) Accounts receivable.

Question 20

Dancing Feet Company,a sole proprietorship,acquired a building for use in the business on April 15,2015,for $475,000.Straight-line depreciation allowed was $25,386.Dancing Feet Company sold the building for $380,000 on May 1,2017:
a.What is the adjusted basis of the property at the time of the sale?
b.What is the amount of the gain (loss)upon the sale of the building?
c.What is the nature of the gain (loss)?

Accepted Answer

a.$449,614
b.($69,61

The following is true if land is sold except:

Beatrice,a single taxpayer,has W-2 income of $93,700.She also has a short-term capital loss of $7,000,a short-term capital gain of $1,000,and a long-term capital gain of $2,000.What is Yolanda's AGI for 2017?

Keeley purchased 1,000 shares in FAM Inc. ,for $10,000 on December 19,2016.The company went bankrupt on July 10,2017 with no hope of recovery for the shareholders. a.On what date is the stock deemed to be worthless? b.What is the nature of the loss?

Heidi invested in a mid-sized local company with gross assets of $17,000,000.Heidi purchased 2,000 shares for $44,000 in 2000.In 2017,Heidi sold the stock for $84,000.How is the gain treated for tax purposes?

Currently,the maximum long term capital gain rate applied to a taxpayer in the 15% regular tax bracket is 0%.

Before the tax implications of asset sales can be determined,which of the following must be determined?

Francisco sells a parcel of land for $100,000 cash and the buyer also assumes Francisco's liability of $10,000.The basis of his land is $70,000.What is the gain or loss realized on the sale?

Otis bought a 2-unit apartment building in July 2010 for $330,000 and sold it for $400,000 on December 20,2017.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Gabriella,a single taxpayer,has wage income of $160,000.In addition,she has $7,000 in long-term capital losses,$1,000 in long-term capital gains,$3,000 in short-term capital gains,and $1,000 in short-term losses.What is Gabriella's AGI for 2017?

Property owned by a taxpayer and used either for personal purposes,investment,or in a trade or business is a capital asset.

Aneta sold an apartment building for $713,470 in 2017.She purchased the building in 2011 for $600,000 and has taken $151,806 in depreciation on the building.Assuming Aneta is in the 33% tax bracket,how is her gain taxed?

Tanisha buys a sculpture from a collector for resale in her gallery for $8,400.She sold it 15 months later for $12,500.What are the nature and amount of the gain on the sale of the sculpture?

Unused capital losses in any one year carry forward indefinitely to offset any future short-term or long-term gains.

Which of the following is Section 1231 property?

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 7: Capital Gains and Other Sales of Property Schedule D and Form 4797

The following is true if land is sold except:

Beatrice,a single taxpayer,has W-2 income of $93,700.She also has a short-term capital loss of $7,000,a short-term capital gain of $1,000,and a long-term capital gain of $2,000.What is Yolanda's AGI for 2017?

Keeley purchased 1,000 shares in FAM Inc. ,for $10,000 on December 19,2016.The company went bankrupt on July 10,2017 with no hope of recovery for the shareholders. a.On what date is the stock deemed to be worthless? b.What is the nature of the loss?

Heidi invested in a mid-sized local company with gross assets of $17,000,000.Heidi purchased 2,000 shares for $44,000 in 2000.In 2017,Heidi sold the stock for $84,000.How is the gain treated for tax purposes?

Currently,the maximum long term capital gain rate applied to a taxpayer in the 15% regular tax bracket is 0%.

Before the tax implications of asset sales can be determined,which of the following must be determined?

Francisco sells a parcel of land for $100,000 cash and the buyer also assumes Francisco's liability of $10,000.The basis of his land is $70,000.What is the gain or loss realized on the sale?

Otis bought a 2-unit apartment building in July 2010 for $330,000 and sold it for $400,000 on December 20,2017.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Gabriella,a single taxpayer,has wage income of $160,000.In addition,she has $7,000 in long-term capital losses,$1,000 in long-term capital gains,$3,000 in short-term capital gains,and $1,000 in short-term losses.What is Gabriella's AGI for 2017?

Property owned by a taxpayer and used either for personal purposes,investment,or in a trade or business is a capital asset.

Aneta sold an apartment building for $713,470 in 2017.She purchased the building in 2011 for $600,000 and has taken $151,806 in depreciation on the building.Assuming Aneta is in the 33% tax bracket,how is her gain taxed?

Tanisha buys a sculpture from a collector for resale in her gallery for $8,400.She sold it 15 months later for $12,500.What are the nature and amount of the gain on the sale of the sculpture?

Unused capital losses in any one year carry forward indefinitely to offset any future short-term or long-term gains.

Which of the following is Section 1231 property?

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters