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

Harold is a head of household,has $27,000 of taxable income in 2010 from non-capital gain or loss sources,and has the following capital gains and losses: What is Harold's taxable income and the tax on that taxable income?

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

Barbara has the following results of netting her short-term and long-term capital gains and losses for 2010: $36,000 short-term capital loss,$22,000 net long-term capital gain ($21,000 0%/15% long-term capital gain,and $1,000 28% long-term capital gain).What is her net capital gain or loss for 2010 and,if there is a net capital loss,how much of the loss and what type of loss carries over to 2011?

Julia purchased vacant land in 2009 that she subdivided for resale as lots.All 10 of the lots were sold during 2010.The lots had a tax basis of $3,000 each and sold for $45,000 each.Julia made no substantial improvements to the lots.She acted as her own real estate broker;so there were no sales expenses for selling the lots.Which of the following statements is correct?

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

The tax law requires that capital gains and losses be separated from other types of gains and losses.Among the reasons for this treatment are:

Vertigo,Inc. ,has a 2010 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2009.For 2010,Vertigo's net § 1231 loss is treated as:

Jon owned a rental building (but not the land)that was destroyed by a hurricane.The building was insured and Jon has a $56,000 gain because his insurance recovery exceeded his adjusted basis for the building.Jon does not intend to replace the building.Jon had taken $45,000 of depreciation on the building,has no § 1231 lookback loss,has no other § 1231 transactions for the year,and has no Schedule D transactions for the year.What is the final nature of Jon's gain for the year and what tax rate(s)apply to the gain?

Assume a building is subject to § 1250 depreciation recapture because it was acquired before 1987 and accelerated depreciation was used to depreciate it.The building is destroyed in a fire and this is the taxpayer's only casualty or theft for the year.In which of the following situations could there be a § 1250 depreciation recapture gain?

Sam operates a retail hardware store as a sole proprietorship.Which of the following items are capital assets in the hands of Sam?

Marsha is single with no dependents.She had 2010 taxable income of $155,000 which included $36,000 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 23,2010.The machinery had been acquired on April 1,2008,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:

Why is it generally better to have a net § 1231 gain year followed by a net § 1231 loss year rather than a net § 1231 loss year followed by a net § 1231 gain year?

Tan,Inc. ,has a 2010 $50,000 long-term capital gain included in its $185,000 taxable income.Which of the following is correct?

Ulma had the following transactions during 2010: a painting held for three years and sold at a gain of $65,000;100 shares of Gray stock held six months and sold for a loss of $3,000;50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Ulma also had $344,000 of taxable income from other sources than these property transactions.What is Ulma's net capital gain or loss and what is her taxable income?

Which of the following is correct?

An individual has the following recognized gains and losses from disposition of § 1231 assets (all the assets were vacant land): $15,000 gain,$10,000 loss,$25,000 gain,and $2,000 loss.The individual has a $5,500 § 1231 lookback loss.The individual also has a $16,000 net short-term capital loss from the disposition of stock.Which of the following statements is correct?

Which of the following assets held by a retail business is a § 1231 asset?

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

Monty is in the business of song writing.He writes jingles for television advertisements.He writes a jingle and sells it for a lump sum plus a royalty each time the jingle is played on TV.He has: