Question 1

Sara is filing as head of household and has 2015 taxable income of $57,000 which includes $3,000 of net long-tem capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

Accepted Answer

A)  $0
B)  $8,573
C)  $8,273
D)  $8,373
E)  None of the aboveF) B) and E)
G) None of the above

Question 2

A lessor is paid $45,000 by its commercial tenant as a lease cancellation fee.The tenant wanted to get out of its lease so it could move to a different building.The lessor had held the lease for three years before it was canceled.The lessor had a zero tax basis for the lease.The lessor has received:

Accepted Answer

A)  Ordinary income of $45,000.
B)  Long-term capital gain of $45,000.
C)  Short-term capital gain of $45,000.
D)  Neither gain nor loss.
E)  None of the above.F) None of the above
G) B) and D)

Question 3

Robin Corporation has ordinary income from operations of $30,000,net long-term capital gain of $10,000,and net short-term capital loss of $15,000.What is the taxable income for 2015?

Accepted Answer

A)  $25,000
B)  $27,000
C)  $28,500
D)  $30,000
E)  None of the aboveF) B) and E)
G) None of the above

Question 4

Martha has both long-term and short-term 2014 capital gains and losses.The result of netting these gains and losses is a net long-term capital loss.Martha has no qualified dividend income.Also,Martha's 2014 taxable income puts her in the 28% tax bracket.Which of the following is correct?

Accepted Answer

A)  Martha will use Parts I,II,and III of 2014 Form 1040 Schedule D.
B)  Martha will not benefit from the special treatment for long-term capital gains.
C)  Martha will have a capital loss deduction.
D)  All of the above.
E)  None of the above.F) A) and B)
G) A) and C)

Question 5

White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations.A few months after White places the machine in service,it discovers that the machine is not suitable for White's business.White had fully expensed the machine in the year of acquisition using § 179.White sells the machine for $60,000 in the tax year after it was acquired,but held the machine only for a total of 10 months.What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

Accepted Answer

A)  A capital asset and $60,000 gain.
B)  An ordinary asset and $60,000 gain.
C)  A § 1231 asset and $60,000 gain.
D)  A § 1231 asset and $60,000 loss.
E)  None of the above.F) A) and C)
G) B) and D)

Question 6

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

Accepted Answer

A)  At the time the short sale is made,the taxpayer does not deliver to the purchaser the shares sold short.
B)  At the time the short sale is made,the taxpayer delivers to the purchaser the shares sold short.
C)  At the time the short sale is made,the taxpayer may already own the shares sold short.
D)  At the time the short sale is made,the taxpayer always already owns the shares sold short.
E)  None of the above.F) C) and D)
G) A) and E)

Question 7

Vertigo,Inc. ,has a 2015 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2014.For 2015,Vertigo's net § 1231 loss is treated as:

Accepted Answer

A)  Ordinary loss.
B)  Ordinary gain.
C)  Capital loss.
D)  Capital gain.
E)  None of the above.F) B) and E)
G) A) and D)

Question 8

In 2014,Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2015,Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct?

Accepted Answer

A)  Jenny has a 2015 $18,000 net capital gain.
B)  Jenny has a 2015 $9,000 net capital gain.
C)  Jenny has a 2015 $9,000 net capital loss.
D)  Jenny has a 2015 $3,000 capital loss deduction.
E)  Jenny has a 2015 $9,000 capital loss deduction.F) All of the above
G) A) and B)

Question 9

In 2015,an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain.Which of the following statements is correct?

Accepted Answer

A)  All of the LTCG will be taxed at 0%.
B)  All of the LTCG will be taxed at 15%.
C)  All of the LTCG will be taxed at 20%.
D)  Some of the LTCG will be taxed at 15% and some at 20%.
E)  None of the above.F) A) and E)
G) D) and E)

Question 10

Gold Company signs a 13-year franchise agreement with Silver.Silver retained significant powers,rights,and a continuing interest.Gold Company (the franchisee)  makes noncontingent payments of $18,000 per year for the first four years of the franchise.Gold Company also pays a contingent fee of 2% of gross sales every month.Which of the following statements is correct?

Accepted Answer

A)  Gold Company may deduct the $18,000 per year noncontingent payments in full as they are made.
B)  Gold Company may deduct the monthly contingent fee as it is paid.
C)  Gold Company may deduct both the noncontingent annual fee and the contingent monthly fees as they are paid.
D)  Gold Company may not deduct either the noncontingent annual fee or the contingent monthly fees as they are paid.
E)  None of the above.F) A) and E)
G) A) and B)

Question 11

Tan,Inc. ,sold a forklift on April 12,2015,for $8,000 (its FMV)  to its 100% shareholder,Ashley.Tan's adjusted basis for the forklift was $12,000.Ashley's holding period for the forklift:

Accepted Answer

A)  Includes Tan's holding period for the forklift.
B)  Begins on April 12,2015.
C)  Begins on April 13,2015.
D)  Does not begin until Ashley sells the forklift.
E)  None of the above.F) B) and E)
G) A) and D)

Question 12

In 2015,Mark has $18,000 short-term capital loss,$7,000 28% gain,and $6,000 0%/15%/20% gain.Which of the statements below is correct?

Accepted Answer

A)  Mark has a $5,000 capital loss deduction.
B)  Mark has a $3,000 capital loss deduction.
C)  Mark has a $13,000 net capital gain.
D)  Mark has a $5,000 net capital gain.
E)  Mark has a $18,000 net capital loss.F) B) and D)
G) B) and C)

Question 13

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

Accepted Answer

A)  Inventory.
B)  Office furniture used in the business and held less than one year.
C)  A factory building used in the business and held more than one year.
D)  Accounts receivable.
E)  All of the above.F) A) and B)
G) A) and E)

Question 14

Cason is filing as single and has 2015 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long-term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

Accepted Answer

A)  $0
B)  $200
C)  $4,954
D)  $300
E)  None of the aboveF) B) and D)
G) A) and E)

Question 15

Ryan has the following capital gains and losses for 2015: $6,000 STCL,$5,000 28% gain,$2,000 25% gain,and $6,000 0%/15%/20% gain.Which of the following is correct:

Accepted Answer

A)  The net capital gain is composed of $1,000 25% gain and $6,000 0%/15%/20% gain.
B)  The net capital gain is composed of $5,000 28% gain and $2,000 0%/15%/20% gain.
C)  The net capital gain is composed of $3,000 28% gain,$2,000 25% gain,and $2,000 0%/15%/20% gain.
D)  The net capital gain is composed of $1,000 28% gain and $6,000 0%/15%/20% gain.
E)  None of the above.F) C) and D)
G) A) and E)

Question 16

Violet,Inc. ,has a 2015 $80,000 long-term capital gain included in its $285,000 taxable income.Which of the following is correct?

Accepted Answer

A)  Violet will benefit from an alternative tax on net capital gains computation.
B)  Violet's regular tax on taxable income will be the same as its tax using an alternative tax on net capital gains approach.
C)  Violet's $80,000 net capital gain is not taxable.
D)  Violet's regular tax on taxable income will be greater than its tax using an alternative tax on net capital gain approach.
E)  None of the above.F) B) and D)
G) A) and C)

Question 17

Virgil was leasing an apartment from Marple,Inc.Marple paid Virgil $1,000 to cancel his lease and move out so that Marple could demolish the building.As a result:

Accepted Answer

A)  Virgil has a $1,000 capital gain.
B)  Virgil has a $1,000 capital loss.
C)  Marple has a $1,000 capital loss.
D)  Marple has a $1,000 capital gain.
E)  None of the above.F) A) and D)
G) B) and E)

Question 18

In 2015,Satesh has $5,000 short-term capital loss,$13,000 0%/15%/20% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?

Accepted Answer

A)  No more than $13,000 of Satesh's taxable income is taxed at 0%.
B)  No more than $7,000 of Satesh's taxable income is taxed at 0%.
C)  No more than $15,000 of Satesh's taxable income is taxed at 0%.
D)  None of Satesh's taxable income is taxed at 0%.
E)  All of Satesh's taxable income is taxed at 0%.F) D) and E)
G) All of the above

Question 19

Which of the following comparisons is correct?

Accepted Answer

A)  Corporations may carryback capital losses;individuals may not.
B)  Both corporation and individual long-term capital losses carryover as short-term capital losses.
C)  Corporations may carryforward capital losses indefinitely;individuals may only carryforward capital losses for five years.
D)  Both corporations and individuals may use an alternative tax rate on net capital gains.
E)  None of the above.F) A) and E)
G) C) and E)

Question 20

On June 10,2015,Ebon,Inc.acquired an office building as a result of a like-kind exchange.Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange.Which of the statements below is correct?

Accepted Answer

A)  The holding period of the factory building includes the holding period of the office building.
B)  The holding period of the office building starts on June 11,2015.
C)  The holding period of the office building starts on June 10,2015.
D)  The holding period of the office building includes the holding period of the factory building.
E)  None of the above.F) D) and E)
G) C) and D)

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

Correct Answer
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Cason is filing as single and has 2015 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long-term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

Correct Answer
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A lessor is paid $45,000 by its commercial tenant as a lease cancellation fee.The tenant wanted to get out of its lease so it could move to a different building.The lessor had held the lease for three years before it was canceled.The lessor had a zero tax basis for the lease.The lessor has received:

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

Correct Answer
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In 2014,Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2015,Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct?

Correct Answer
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Which of the following comparisons is correct?

Correct Answer
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Robin Corporation has ordinary income from operations of $30,000,net long-term capital gain of $10,000,and net short-term capital loss of $15,000.What is the taxable income for 2015?

Correct Answer
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In 2015,Satesh has $5,000 short-term capital loss,$13,000 0%/15%/20% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?

Correct Answer
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In 2015,Mark has $18,000 short-term capital loss,$7,000 28% gain,and $6,000 0%/15%/20% gain.Which of the statements below is correct?

Correct Answer
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Correct Answer
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Which of the following assets held by a manufacturing business is a § 1231 asset?

Correct Answer
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Vertigo,Inc. ,has a 2015 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2014.For 2015,Vertigo's net § 1231 loss is treated as:

Correct Answer
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Tan,Inc. ,sold a forklift on April 12,2015,for $8,000 (its FMV) to its 100% shareholder,Ashley.Tan's adjusted basis for the forklift was $12,000.Ashley's holding period for the forklift:

Correct Answer
verified

Virgil was leasing an apartment from Marple,Inc.Marple paid Virgil $1,000 to cancel his lease and move out so that Marple could demolish the building.As a result:

Correct Answer
verified

On June 10,2015,Ebon,Inc.acquired an office building as a result of a like-kind exchange.Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange.Which of the statements below is correct?

Correct Answer
verified

Violet,Inc. ,has a 2015 $80,000 long-term capital gain included in its $285,000 taxable income.Which of the following is correct?

Correct Answer
verified

Correct Answer
verified

Martha has both long-term and short-term 2014 capital gains and losses.The result of netting these gains and losses is a net long-term capital loss.Martha has no qualified dividend income.Also,Martha's 2014 taxable income puts her in the 28% tax bracket.Which of the following is correct?

Correct Answer
verified

In 2015,an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain.Which of the following statements is correct?

Correct Answer
verified

Ryan has the following capital gains and losses for 2015: $6,000 STCL,$5,000 28% gain,$2,000 25% gain,and $6,000 0%/15%/20% gain.Which of the following is correct:

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Cason is filing as single and has 2015 taxable income of $36,000 which includes $34,000 of 0%/15%/20% net long-term capital gain.What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2014,Jenny had a $12,000 net short-term capital loss and deducted $3,000 as a capital loss deduction.In 2015,Jenny has a $18,000 0%/15%/20% long-term capital gain and no other capital gain or loss transactions.Which of the statements below is correct?

Correct AnswerverifiedShow Answer

Which of the following comparisons is correct?

Correct AnswerverifiedShow Answer

Robin Corporation has ordinary income from operations of $30,000,net long-term capital gain of $10,000,and net short-term capital loss of $15,000.What is the taxable income for 2015?

Correct AnswerverifiedShow Answer

In 2015,Satesh has $5,000 short-term capital loss,$13,000 0%/15%/20% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In 2015,Mark has $18,000 short-term capital loss,$7,000 28% gain,and $6,000 0%/15%/20% gain.Which of the statements below is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Vertigo,Inc. ,has a 2015 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2014.For 2015,Vertigo's net § 1231 loss is treated as:

Correct AnswerverifiedShow Answer

Tan,Inc. ,sold a forklift on April 12,2015,for $8,000 (its FMV) to its 100% shareholder,Ashley.Tan's adjusted basis for the forklift was $12,000.Ashley's holding period for the forklift:

Correct AnswerverifiedShow Answer

Virgil was leasing an apartment from Marple,Inc.Marple paid Virgil $1,000 to cancel his lease and move out so that Marple could demolish the building.As a result:

Correct AnswerverifiedShow Answer

On June 10,2015,Ebon,Inc.acquired an office building as a result of a like-kind exchange.Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange.Which of the statements below is correct?

Correct AnswerverifiedShow Answer

Violet,Inc. ,has a 2015 $80,000 long-term capital gain included in its $285,000 taxable income.Which of the following is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Martha has both long-term and short-term 2014 capital gains and losses.The result of netting these gains and losses is a net long-term capital loss.Martha has no qualified dividend income.Also,Martha's 2014 taxable income puts her in the 28% tax bracket.Which of the following is correct?

Correct AnswerverifiedShow Answer

In 2015,an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Ryan has the following capital gains and losses for 2015: $6,000 STCL,$5,000 28% gain,$2,000 25% gain,and $6,000 0%/15%/20% gain.Which of the following is correct:

Correct AnswerverifiedShow Answer

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