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

Spencer has an investment in two parcels of vacant land.Parcel 1 is a capital asset and parcel 2 is a § 1231 asset.Spencer already has short-term capital loss for the year he would like to offset with capital gain.Spencer has § 1231 lookback loss that exceeds the gain from the disposition of either land parcel.Spencer only wants to sell one land parcel and each of them would yield the same amount of gain.The gain that would be recognized exceeds the short-term capital loss Spencer already has.Which of the statements below is correct?

On January 18, 2011, Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11, 2012, she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10, 2013, Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2011.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 2012? In 2013?

Martha is single with one dependent and files as head of household. She had 2012 taxable income of $45,000 which included $16,000 of 0%/15% net long-term capital gain. What is her tax on taxable income using the alternative tax on net long-term capital gain method?

Orange Company had machinery destroyed by a fire on December 23, 2012.The machinery had been acquired on April 1, 2010, for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed and Orange received $30,000 of insurance proceeds for the machine and did not replace it.This was Orange's only casualty or theft event for the year.As a result of this event, Orange has: