Exam 10: Property Transactions: Capital Gains and Losses

Armanti received a football championship ring in college. During difficult economic times,Armanti sold the ring at a pawn shop. What are the tax issues of the sale to Armanti?

Melanie,a single taxpayer,has AGI of $220,000 which includes $160,000 of salary and $60,000 of investment income. She will pay Medicare tax on the $60,000 of investment income of

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

If stock sold or exchanged is not specifically identified,the FIFO (first-in,first-out)method of identification must be used.

Candice owns a mutual fund that reinvests her dividends and capital gains earned during the year.The mutual fund reported to her that her share of earnings was: $500 in dividends,$1,500 in short-term net capital gains,and $1,300 in long-term net capital gains.She reported the items on her tax return and paid the appropriate tax on these earnings.If her basis in the fund was $25,000 at the beginning of the year,what is her basis at the end of the year?

Section 1221 of the Code includes a comprehensive list of assets properly classified as capital assets.

During the current year,Don's aunt Natalie gave him a house.At the time of the gift,the house had a FMV of $144,000 and his aunt's adjusted basis was $133,000.After deducting the annual exclusion,the amount of the gift was $130,000.His aunt paid a gift tax of $20,000 on the house.What is Don's basis in the house for purposes of determining gain?

Melody inherited 1,000 shares of Corporation Zappa stock from her mother who died on March 4 of the current year.Her mother paid $30 per share for the stock on September 2,2005.The FMV of the stock on the date of death was $65 per share.On September 4 of the current year,the FMV of the stock was $70 per share.Melody sold the stock for $85 per share on December 3.The estate qualified for,and the executor elected,the alternate valuation method for these and other assets in the estate.An estate tax return was filed.What was Melody's basis in the stock on the date of the sale?

Allison buys equipment and pays cash of $50,000,signs a note of $10,000 and assumes a liability on the property for $3,000.Also,Allison pays an installation cost of $500 and a delivery cost of $800.Allison's basis in the asset is

Dale gave property with a basis of $16,000 to Sarah when it had a FMV of $12,000.No gift taxes were due. Sarah later sold the property for $22,000 resulting in a recognized gain of

Stock purchased on December 15,2013,which becomes worthless in March 2014 produces a STCL since the holding period is one year or less.

Bob owns 100 shares of ACT Corporation common stock with a basis of $3,500 and a FMV of $12,000.Bob receives 10 stock rights as a nontaxable distribution,and no basis is allocated to the stock rights.With each stock right,Bob may acquire one share of stock for $25.Bob exercises all 10 stock rights.The total basis of the newly acquired stock is

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

When a taxpayer has NSTCL and NLTCG,the loss is offset against NLTCG from the 28% group,then NLTCG from the 25% group,and finally against NLTCG from the 15% or 20% group.

In 2006,Regina purchased a home in Las Vegas which cost $280,000. Due to increase in the market value of the home,she refinanced her mortgage and her debt on the home totaled $300,000 at the end of 2007. Regina accepted a new job in Dallas in April 2012. Unable to sell her home,she rented it in November 2012,at which time its fair market value was $240,000. In June,2014,she sold the home for $230,000. What tax issues should Regina consider?

Empire Corporation purchased an office building for $500,000 cash on April 1.Prior to renting it out to tenants on July 1,Empire spent $200,000 on materials and labor to renovate the property.It funded $50,000 of the renovation cost with its own funds and borrowed the remaining $150,000.As of July 1,$2,000 of interest had been paid to the bank,but none of the principal had been repaid.The basis of the building on July 1 is

How long must a capital asset be held to qualify for long-term treatment?

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

In the current year,Andrew received a gift of property from his uncle.At the time of the gift,the property had a FMV of $114,000 and an adjusted basis to his uncle of $70,000.After deducting the annual exclusion,the amount of the gift was $100,000.Andrew's uncle paid a gift tax on the property of $24,000.What is the amount of Andrew's basis in the property?

For purposes of calculating depreciation,property converted from personal use to business use will take on a basis equal to the greater of its FMV or its adjusted basis on the date of the conversion.