Exam 14: Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Charmine, a single taxpayer with no dependents, has already incurred a $10,000 § 1231 gain in 2012 and has no § 1231 lookback losses. The taxpayer purchased a business machine for $100,000 five years ago, $70,000 of depreciation has been taken on it, and the machine is now worth $90,000. How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $322,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses, what is her taxable income?

Section 1231 property generally does not include accounts receivables arising in the ordinary course of business.

Carol had the following transactions during 2012: a painting held for two years and sold at a gain of $65,000; 100 shares of Gray stock held six months and sold for a loss of $6,000; 50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Carol also had $264,000 of taxable income from other sources than these property transactions.What is Carol's net capital gain or loss and what is her taxable income?

When a patent is transferred, the most common forms of payment received by the transferor are a lump sum and/or periodic payment.

Theresa and Oliver, married filing jointly, and both over 65 years of age, have no dependents.Their 2012 income tax facts are: What is their taxable income for 2012?

Sara is filing as head of household and has 2012 taxable income of $27,000 which includes $13,000 of net long-tem capital gain. The net long-term capital gain is made up of $10,000 25% gain and $3,000 0%/15% gain. What is the tax on her taxable income using the alternative tax method?

Which of the following would extinguish the § 1245 recapture potential?

Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

Nonrecaptured § 1231 losses from the seven prior tax years may cause current year net § 1231 gain to be treated as ordinary income.

"Collectibles" held long-term and sold at a gain are subject to maximum tax rate of 28%.An individual taxpayer recently sold a baseball card for $400.The card had been held for several years and $40 was originally paid for it.The card depicts a famous baseball player (who hit 73 home runs in a recent season) when he was a rookie in the major leagues.Explain why the baseball card is or is not a collectible.

An individual had the following gains and losses during 2012 on property held for the long-term holding period: sale of Orange common stock ($8,000 gain); sale of real property used in the taxpayer's business ($1,800 loss); destruction of real property used in the taxpayer's business by fire ($1,000 loss).Which of the following statements is correct?

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.

A business taxpayer sells inventory for $40,000.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:

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% net long-term capital gain.

A barn held more than one year and used in a business is destroyed in a tornado. The barn originally cost $356,000 and was fully depreciated using straight-line depreciation. The barn was insured for its $543,000 replacement cost minus a deductible of $1,000. Which of the statements below is correct concerning these facts?

What characteristics must the seller of a patent have in order to be classified as a holder?

Which of the following is correct concerning short sales of stock?

Marvin is in the business of song writing.He writes jingles for web ads. He writes a song and sells it for a lump sum. He has:

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

The chart below details Sheen's 2010, 2011, and 2012 stock transactions.What is the capital loss carryover to 2012 and what is the net capital gain or loss for 2012?