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Exam 14: Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

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Question 31

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Violet,Inc.,has a 2017 $80,000 long-term capital gain included in its $285,000 taxable income.Which of the following is correct?

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) All of the above
G) B) and D)

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Question 32

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A worthless security had a holding period of 6 months when it became worthless on December 10,2017.The investor who had owned the security had a basis of $20,000 for it.Which of the following statements is correct?

A) The investor has a long-term capital loss of $20,000.
B) The investor has a short-term capital loss of $20,000.
C) The investor has a nondeductible loss of $20,000.
D) The investor has a short-term capital gain of $20,000.
E) None of the above.

F) A) and B)
G) B) and D)

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Question 33

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A business taxpayer sold all the depreciable assets of the business,calculated the gains and losses,and would like to know the final character of those gains and losses.The taxpayer had $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $22,000.What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed? What is the taxpayer's adjusted gross income? (Ignore the self-employment tax deduction.)

Which of the following is correct?

An individual had the following gains and losses during 2017 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?

Which of the following events causes the purchaser of an option to add the cost of the option to the basis of the property to which the option relates?

Section 1245 applies to amortizable § 197 intangible assets.

The chart below details Sheen's 2015,2016,and 2017 stock transactions.What is the capital loss carryover to 2017 and what is the net capital gain or loss for 2017?

A business machine purchased April 10,2015,for $98,000 was fully depreciated in 2015 using § 179 immediate expensing.On August 15,2017,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

The following assets in Jack's business were sold in 2017: ​ The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2017 (the year of sale) ,Jack should report what amount of net capital gain and net ordinary income?

Ryan has the following capital gains and losses for 2017: $6,000 STCL,$5,000 28% gain,$2,000 25% gain,and $6,000 0%/15%/20% gain.Which of the following is correct:

Red Company had an involuntary conversion on December 23,2017.The machinery had been acquired on April 1,2015,for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it.This was Red's only casualty or theft event for the year.As a result of this event,Red initially has:

When an individual taxpayer has a net long-term capital gain that includes both 28% gain and 0%/15%/20% gain,which of these gains will be taxed first when the alternative tax on net long-term capital gain method is used and what difference does it make?

Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line) of $65,000.If Lynne sold the property,she would have a $53,000 gain.The initial characterization of the gain would be:

An individual has a $40,000 § 1245 gain,a $35,000 § 1231 gain,a $33,000 § 1231 loss,a $3,000 § 1231 lookback loss,and a $15,000 long-term capital gain.The net long-term capital gain is:

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%/20% net long-term capital gain.

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?

Hank inherited Green stock from his mother when she died.The mother had a tax basis of $366,000 for the Green stock when she died and the Green stock was worth $437,000 at the date of her death.Which of the statements below is correct?

Martha has both long-term and short-term 2016 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 2016 taxable income puts her in the 28% tax bracket.Which of the following is correct?

If there is a net § 1231 loss,it is treated as an ordinary loss.