Exam 21: Property Transactions: Capital Gains and Losses

Josh 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 Josh sells the property for $280,000,his gain or loss will be

Niral is single and provides you with the following tax information for 2017: Compute her tax liability.[Show all calculations in good form.]

Sachi is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2017 for $15,950.That asset was purchased six years earlier and has a tax basis of $5,000.The tax liability applicable to only the capital gain is

Stock purchased on December 15,2016,which becomes worthless in March 2017,produces a STCL since the holding period is one year or less.

Billy and Sue are married and live in Texas,a community property state.They jointly own real property with an adjusted basis of $200,000.When the property has a FMV of $450,000,Billy dies leaving all of the property to Sue.If she later sells the property for $650,000,what is Sue's gain on the sale?

Bad debt losses from nonbusiness debts are deductible as short-term or long-term capital losses depending on how long the debt was outstanding.

Corporate taxpayers may offset capital losses only against capital gains and may carry excess losses back three years and then forward five years.

Max sold the following capital assets this year: What is the amount of and nature of (LT or ST)capital gain or loss?

A building used in a trade or business is a capital asset.

The gain or loss on an asset purchased on March 31,2016,and sold on March 31,2017,is classified as short-term.

Five different capital gain tax rates could apply to long-term capital assets sold by noncorporate taxpayers.

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?

Olivia,a single taxpayer,has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

Distinguish between the Corn Products doctrine and the ruling in the Arkansas Best Corporation case.

Mike sold the following shares of stock in 2017: What are the tax consequences of these transactions,assuming his marginal tax rate is (a)33% and (b)39.6%? Ignore the medicare tax on net investment income.

Antonio is single and has taxable income of $150,000 without considering the sale of a capital asset (land held for investment)in September of 2017 for $25,000.That asset was purchased six years earlier and has a tax basis of $5,000.The tax liability applicable to only the capital gain (without consideration of the additional Medicare tax)is

Galvin Corporation has owned all of the stock of Rialto Corporation for five years.Rialto Corporation has been actively engaged in manufacturing in Kansas,but it is now bankrupt,and the stock is worthless.Galvin Corporation will recognize a long-term capital loss.

All recognized gains and losses must eventually be classified either as capital or ordinary.

Mike,a dealer in securities and calendar-year taxpayer,purchased a security for inventory on November 18,2016 for $15,000.The FMV on December 31,2016 was $16,000.The security was sold on December 19,2017 for $16,500.These transactions result in