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Exam 16: Property Transactions: Capital Gains and Losses

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Question 31

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Samuel, head of household with two dependents, has 2019 wages of $26,000, paid alimony of $3,000, has taxable interest income of $2,000, and a $12,000 0%/15%/20% net long-term capital gain.Samuel uses the standard deduction and is age 38.What is his 2019 taxable income and the tax on the taxable income?

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Samuel has $18,650 taxable income and th...

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Question 32

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Property is acquired in a qualifying like-kind exchange.The acquired property is sold three months after it is acquired. Which of the following is correct?

A) Since the holding period of the property given up in the exchange tacks to the holding period of the acquired property, the holding period of the acquired property could be long-term.
B) The holding period of the acquired property is short-term.
C) The holding period of property acquired in a like-kind exchange is always long-term.
D) When property acquired in a like-kind exchange is disposed of, the holding period is not relevant.
E) None of these.

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

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Question 33

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Collectibles that are held long-term and sold at a gain are subject to maximum tax rate of 28%.An individual taxpayer recently sold an antique car for $40,000.The taxpayer had originally paid $30,000 for the car and had held it for for several years .Explain why the car is or is not a collectible.

On January 10, 2019, Wally sold an option for $2,000 on vacant land he held as an investment.He had purchased the land in 2015 for $76,000.The option allowed the option holder to purchase the property for $122,000 plus the cost of the option.On March 1, 2019, the option holder exercised the option.What is the amount and nature of Wally's gain or loss from disposition of the land?

Recognized gains and losses from the disposition of a capital asset may occur as a result of a:

Martha has both long-term and short-term 2019 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, her 2019 taxable income puts her in the 24% tax bracket.Which of the following is correct?

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 2019?

An individual taxpayer with 2019 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2020.

The only thing that the grantee of an option may do with the option is to exercise it or let it expire.

Lease cancellation payments received by a lessor are always ordinary income because they are considered to be in lieu of rental payments.

Which of the following is not a tax status for an asset?

Annabelle, a trader in securities, works for a national securities firm.She occasionally buys and sells securities for her personal account.On May 10, 2018, she purchased 100 shares of Acorn, Inc.common stock for a total of $40,000.She sold all of those shares for a total of $46,000 on July 11, 2019.What was the amount and nature of her gain or loss from this transaction? What could she have done to change this result?

To compute the holding period, start counting on the day after the property was acquired and include the day of disposition.

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

A security that was purchased by an individual and qualifies as § 1244 stock becomes worthless.The taxpayer is single and the loss is $30,000.The loss is treated as an ordinary loss.

The following chart details Sheen's 2017, 2018, and 2019 stock transactions.What is the capital loss carryover to 2019 and what is the net capital gain or loss for 2019? $\begin{array} { r r r r r } \underline{\text { TaxYear }} & \begin{array} { r } \text { Short-Term } \\\underline{\text { CapitalGains }}\end{array} & \begin{array} { r } \text { Short-Term } \\\underline{\text { CapitalLosses }}\end{array} & \begin{array} { r } \text { Long-Term } \\\underline{\text { CapitalGains }}\end{array} & \begin{array} { r } \text { Long-Term } \\\underline{\text { CapitalLosses }}\end{array} \\2017 & \$ 4,000 & \$ 6,000 & \$ 2,000 & \$ 13,000 \\2018 & \$ 16,000 & \$ 14,000 & \$ 23,000 & \$ 28,000 \\2019 & \$ 55,000 & \$ 52,000 & \$ 67,000 & \$ 33,000\end{array}$

In 2019, 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?

A business taxpayer sells inventory for $80,000.The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held more than one year.The taxpayer has:

A worthless security had a holding period of six months when it became worthless on December 10, 2018.The investor who had owned the security had a basis of $20,000 for it.Which of the following statements is correct?

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: