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Exam 16: Property Transactions: Capital Gains and Losses

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Question 41

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Stanley operates a restaurant as a sole proprietorship.Which of the following items are capital assets in the hands of Stanley?

A) The restaurant's tables and chairs.
B) A portable sound system used to play "theme music" for the restaurant.
C) The restaurant building that is an asset of the sole proprietorship.
D) An interest­bearing savings account used to keep the restaurant's excess cash.
E) None of these.

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Question 42

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On January 18,2013,Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11,2014,she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10,2015,Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2013.On that date,Blue Corporation stock had a market price of $4 per share.What is Martha's recognized gain or loss and its character in 2014? In 2015?

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Since Martha owned substantially identic...

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Question 43

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An individual taxpayer with 2014 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2015.

A business taxpayer sells depreciable business property with an adjusted basis of $40,000 for $32,000.The taxpayer held the property for more than a year.The taxpayer has an $8,000 capital loss.

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses.

Short-term capital gain is eligible for a special tax rate only when it exceeds long-term capital gain.

If the holder of an option fails to exercise the option,the lapse of the option is considered a sale or exchange on the option expiration date.

Sara is filing as head of household and has 2014 taxable income of $57,000 which includes $3,000 of net long-term 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?

In early 2013,Wanda paid $33,000 for an option on a parcel of land she intended to hold as an investment.After a survey of the land (paid for by the grantor)determined that the parcel was much smaller than the grantor said it was,she let the option lapse when it expired in 2014 after 14 months.How should Wanda treat these events in 2013? 2014?

On June 10,2014,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?

Sharon has the following results of netting her short-term and long-term capital gains and losses for 2014: $56,000 short-term capital loss,and $82,000 net long-term capital gain ($21,000 0%/15%/20% long-term capital gain,and $61,000 25% long-term capital gain). a()What is her net capital gain or loss for 2014? b()If there is a net capital loss,how much of the loss and what type of loss carries over to 2015? c()If there is a net long-term capital gain,what is it made up of?

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