Exam 16: Property Transactions Capital Gains and Losses

Robin Corporation has ordinary income from operations of $30,000,net long-term capital gain of $10,000,and net short-term capital loss of $15,000.What is the taxable income for 2016?

Ranja acquires $200,000 face value corporate bonds for $186,000 when the bonds are issued.He holds the bonds as an investment for two years and then sells them for $198,000.He amortizes $2,000 of the OID.What tax issues does Ranja have with respect to these bonds?

Willie is the owner of vacant land that he purchased in 2012 for $1,400,000 and held for investment.On January 22,2015,he was paid $145,000 for a thirteen-month option on the land by Susan.Susan could buy the land for an additional $1,200,000 by exercising the option.Susan had hoped to build a luxury home on the land,but was unable to get approval to build a big enough home to satisfy her needs.Consequently,Susan did not exercise her option and the option expired on February 22,2016.(1)What is Willie's basis,gain or loss,and type of gain or loss from these events? (2)What is Susan's basis,gain or loss,and type of gain or loss from these events?

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

Jambo invented a new flexible cover for a popular brand of cellphone,but did not have the finances to begin production of the cover.Instead,he sold all his rights to the invention (after patenting it)for $450,000 plus $.10 for each cover sold by the company that purchased the patent.Jambo had a zero tax basis for the invention.What is the character of his gain from disposition of the patent?

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.

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.

"Collectibles" held long-term and sold at a gain are subject to maximum tax rate of 28%.An individual taxpayer recently sold an antique car for $40,000.The car had been held for several years and $30,000 was originally paid for it.Explain why the car is or is not a collectible.

An individual taxpayer with 2016 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2017.

A lessor is paid $45,000 by its commercial tenant as a lease cancellation fee.The tenant wanted to get out of its lease so it could move to a different building.The lessor had held the lease for three years before it was canceled.The lessor had a zero tax basis for the lease.The lessor has received:

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.

Violet,Inc. ,has a 2016 $80,000 long-term capital gain included in its $285,000 taxable income.Which of the following is correct?

On June 10,2016,Ebon,Inc.acquired an office building as a result of a like-kind exchange.Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange.Which of the statements below is correct?

Cason is filing as single and has 2016 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.

On January 18,2015,Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11,2016,she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10,2017,Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2015.On that date,Blue Corporation stock had a market price of $4 per share.What is Martha's recognized gain or loss and its character in 2016? In 2017?

The chart below details Sheen's 2014,2015,and 2016 stock transactions.What is the capital loss carryover to 2016 and what is the net capital gain or loss for 2016? Tax Year Short-term Capital Gains Short-term Capital Losses Long-term Capital Gains Long-term Capital Losses 2014 $ 4,000 $ 6,000 $ 2,000 $13,000 2015 $16,000 $14,000 $23,000 $28,000 2016 $55,000 $52,000 $67,000 $33,000

Theresa and Oliver,married filing jointly,and both over 65 years of age,have no dependents.Their 2016 income tax facts are: Theresa's wages $165,000 Oliver's wages 33,000 Short-term capital gain 36,000 Long-term capital loss (41,000) What is their taxable income for 2016?

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

A business taxpayer sells inventory for $80,000.The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held more than one year.The taxpayer has:

The tax law requires that capital gains and losses be separated from other types of gains and losses because an alternative tax calculation may be used when taxable income includes net long-term capital gain.