Exam 7: Capital Gains and Other Sales of Property Schedule D and Form 4797

Capital assets are usually defined by the IRC as any asset used for personal or investment purposes and sometimes are defined by the IRC as what they are not.

If the taxpayer has capital gain distributions from a mutual fund and no other capital gain transactions for the year,a Schedule D is not required to be prepared.

On which form or schedule is the selling of inventory related to the course of business recorded for a sole proprietor?

For sales of Section 1231 business property,long-term gains are taxed at preferential rates while long-term losses are considered ordinary losses and deductible in the year they are incurred.

Otis bought a 2-unit apartment building in July 2009 for $330,000 and sold it for $400,000 on December 20,2016.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Marquez purchased some equipment for $58,750 on August 15,2015.He decided he did not need the equipment so he sold it on June 13,2016 for $56,500.The equipment was subject to depreciation of $6,964 for 2015 and 2016.What gain or loss will Marquez recognize on the sale of the equipment?

In 2007,Savannah purchased 200 shares of Hi-Style stock as an investment.The stock cost $17,000.In 2016 when the fair market value was $19,000,Savannah gave the stock to her daughter,Daniele.If no gift tax is paid and Daniele sells the stock for $20,000,she will recognize:

The gain or loss on the sale of property held as an investment is recorded on which one of the following forms or schedules?

A taxpayer who receives only one form 1099-B from the sales of stock can enter the transaction directly to Schedule D.

Section 1231 property is:

Caesar,a single taxpayer,has wage income of $75,000.He also has a short-term capital loss of $5,000,a short-term capital gain of $2,000,and a long-term capital gain of $3,000.What is Caesar's AGI for 2016?

All of the following statements regarding the definition of Section 1231 are incorrect except:

Real property held for investment is a capital asset.

Short-term capital losses first reduce 28% gains,then 25% gains,and if any loss remains,the 20%,15% or 0% group.

Dan sold 135 shares assume 100 are long-term)of Elite Mutual Fund on July 26,2016 for $95 per share and received a 1099-B box 3 was not checked for basis)to record the sale of the shares.Dan's investment portfolio includes the following purchases of Elite Mutual Fund: May 20,2013 50 shares at $100 per share March 29,2014 50 shares at $95 per share August 21,2015 50 shares at $85 per share February 22,2016 100 shares at $75 per share In 2016,Dan will recognize:

Keisha sold 200 shares of Chic-Chic stock in 2016 for $22,500 and received a 1099-B to record the sale of the shares.Keisha's investment portfolio includes the following purchases of Chic-Chic's stock: 2007 100 shares at $100 per share 2008 50 shares at $110 per share 2009 125 shares at $130 per share 2012 75 shares at $125 per share Assuming Keisha does not identify which shares she sold,she will recognize

Keiko sells a piece of equipment used in her business for $14,853 on August 10,2016.The equipment was purchased on January 4,2015 at a cost of $12,849.Keiko has taken $3,855 of depreciation on the equipment.What is the amount and classification of the gain on the sale by Keiko?

Kwon-Lee sold 200 shares held in FNP Mutual Fund in 2016 for $22,500 and received a 1099-B to record the sale of the shares.Kwon-Lee's investment portfolio includes the following purchases of FNP Mutual Fund stock: 2004 100 shares at $100 per share 2008 50 shares at $110 per share 2012 125 shares at $130 per share 2012 75 shares at $125 per share Assuming Kwon-Lee uses the single category average cost method,he will recognize

The purpose of Code Sections 1245 and 1250 recapture provisions is to restrict the possibility of converting ordinary income into capital gains through use of depreciation deductions.

The 25% bracket is a special rate that relates to capital gains from Section 1250 property used in a trade or business.