Deck 11: Property Dispositions

Question 1

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Qualified Small Business stock gain

Answer 1

C

Question 2

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George's wife sells stock she purchased 10 months ago at a gain of $212.

Answer 2

B

Question 3

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George's construction company completed 5 homes during February 2012.He sells one of the homes in March 2013 at a $37,000 gain.

Answer 3

G

Question 4

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Section 1250 property

Question 5

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Section 1231 property

Question 6

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
On December 1,2011,George paid $17,500 for a painting.On October 31,2013,he sells the painting for $26,750.

Question 7

The amount realized equals the gross selling price less any selling expenses.

Question 8

A buyer's assumption of the seller's debt increases the gross sales price and any debt of the buyer assumed by the seller in the transaction also increases the gross sales price.

Question 9

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George sells his personal use automobile at a loss of $4,300.

Question 10

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Section 1245 property

Question 11

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Collectible gain (loss)

Question 12

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George sells a fully depreciated air compressor that cost $975 for $650.The compressor was used to operate air tools.

Question 13

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George regularly invests unneeded business cash in Eli Lilly common stock.He has bought 200 shares of stock on May 1 of each year from 1983 through 2009.Because of an urgent need for cash,he sells 100 shares of the stock at an $850 gain on March 28,2013.Because the stock is held in a brokerage account,he did not have any paper shares of stock to surrender.He merely told his broker to sell 100 shares.

Question 14

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Unrecaptured Section 1250 gain

Question 15

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
George sells land purchased in 1989 that he used to park construction equipment at a gain of $16,500.

Question 16

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Capital Asset

Question 17

Gains on the sale of certain types of business assets,referred to as Section 1231 property,are always treated as capital gains.

Question 18

Allie,a well-known artist,gave one of her paintings to her nephew Alfred.When Alfred sells the painting he will have a capital gain.

Question 19

Match each statement with the correct term below.
a.Stocks, bonds, options.
b.Depreciable real property.
c.Taxed at an effective rate of 14%.
d.Taxed at a maximum rate of 25%.
e.Gain or loss on the sale of artwork.
f.Depreciable tangible personal property.
g.Subject to full recapture as ordinary income of all depreciation taken.
h.Gain on real property attributable to excess depreciation is ordinary income.
Section 1250 recapture

Question 20

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all.
a.Long-term capital
e.Section 1245
b.Short-term capital
f.Section 1250
c.Collectible gain
g.Ordinary income/loss
d.Section 1231
h.Nontaxable/nondeductible
After using a house as his personal home for 20 years,George converts it in 2006 to an office building for use in his construction business.He sells the building at a $65,000 loss in 2013.

Question 21

Net collectibles gains are taxed at a maximum rate of 28%.

Question 22

Section 1231 assets are certain trade or business assets that are not capital assets but are treated as such when sold at a gain or a loss.

Question 23

Drew traded his office copier in for a new one.The old copier had an adjusted basis of $400.The new copier cost $1,350,and he was given a trade-in allowance of $500.
I)The amount realized is $400.
II)Drew has a realized gain of $100.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 24

When her property was fully depreciated and was still encumbered by a mortgage of $6,000,Jamelle sells it subject to the mortgage to David for $1,000.What is Jamelle's realized gain or loss?

A)$ - 0 -
B)$1,000 gain
C)$5,000 gain
D)$6,000 gain
E)$7,000 gain

Question 25

Unrecaptured Section 1250 gain is taxed at a maximum rate of 25%.

Question 26

The gain from the sale of qualified small business stock held for more than six months can be rolled over if stock from another qualified small business is purchased within 60 days.

Question 27

Brock exchanges property with an adjusted basis of $40,000 subject to a mortgage of $20,000 for other property owned by Reese with a fair market value of $80,000.Reese assumes the mortgage.No cash or other assets were part of the trade.Brock's amount realized is

A)$ 40,000
B)$ 50,000
C)$ 80,000
D)$ 90,000
E)$100,000

Question 28

The lookback recapture rule nets the current-year net Section 1231 gain against Section 1231 ordinary loss deductions taken in the previous three years.

Question 29

Section 1245 property is subject to a full recapture of all depreciation taken as ordinary income.

Question 30

Marilyn sells 200 shares of General Motors stock for $80 per share.She pays a $100 commission on the sale and has an adjusted basis of $8,000 on the stock.
I)The amount realized from the sale is $15,900.
II)Marilyn has a recognized gain of $8,000.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 31

Carlos received an antique dresser from his aunt.Since the dresser is worth $6,000 more than what his aunt paid for it,the holding period begins with the date of the gift.

Question 32

Gross selling price includes
I)the amount of a seller's debt assumed by the buyer.
II)the fair market value of services received by the seller from the buyer.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 33

All of the gain from the sale of qualified small business stock,purchased between 9/27/2010 and 1/1/2014,and held more than five years is excluded from tax.

Question 34

Virginia and Dan each own investment realty that they would like to trade.Virginia's property is subject to mortgage debt of $2,000 and has a net of mortgage value of $6,000.Dan's property is subject to mortgage debt of $30,000 and has a net of mortgage value of $5,000.Virginia and Dan agree to exchange properties and assume each other's debt.Dan pays Virginia $1,000 cash,and the exchange is completed.What is the gross selling price of Virginia's property?

A)$ 2,000
B)$ 6,000
C)$ 8,000
D)$ 5,000
E)$35,000

Question 35

For depreciable real property,all depreciation taken must be recaptured and treated as ordinary income.

Question 36

Unrecaptured Section 1250 gain is the amount of gain on the sale of personal assets by individuals not otherwise treated as ordinary income.

Question 37

Adjustments to gross selling price include
I)the amount of a seller's expenses paid by the buyer.
II)the amount of the buyer's debt assumed by the seller.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 38

Cathy owns property subject to a mortgage of $5,000.Annual real estate taxes are $800 and are due and payable on December 31.Cathy sells her property on July 1 of the current year.The buyer assumes her $5,000 mortgage,and Cathy agrees to finance the sale by taking a mortgage note of $50,000 and property valued at $7,500.The buyer agrees to pay the seller's portion of the property taxes.What is Cathy's amount realized?

A)$50,000
B)$57,500
C)$62,500
D)$62,900
E)$63,300

Question 39

Courtney and Nikki each own investment realty that they would like to trade.Courtney's property is subject to mortgage debt of $10,000,and its appraised fair market value is $25,000.Nikki's property is subject to mortgage debt of $17,000,and its appraised fair market value is $25,000.Courtney and Nikki agree to exchange the properties and assume each other's debt.To complete the exchange,who pays cash and how much will that person have to pay?

A)Courtney pays $15,000.
B)Nikki pays $7,000.
C)Nikki pays $8,000.
D)Courtney pays $7,000.
E)Neither person pays anything.

Question 40

When a taxpayer sells only a portion of the securities that they own,the average cost method is used to establish the cost basis for the shares sold.

Question 41

Morgan has the following capital gains and losses for the current tax year
Short-term capital gains
$12,000
Long-term capital gains
3,000
Short-term capital losses
(7,000)
Long-term capital losses
(6,000)
What is Morgan's net capital gain or loss position for the year?

A)$5,000 net short-term capital gain.
B)$2,000 net long-term capital loss.
C)$2,000 net short-term capital gain.
D)$3,000 net long-term capital loss.
E)$4,000 net short-term capital loss.

Question 42

Joyce receives investment property from her mother as a gift in 2013.Her mother paid $15,000 for the property in 2010,and it is valued at $18,000 on the date of the gift.Joyce sells the property eight months later for $16,000.Joyce's realized gain or loss is

A)$ 1,000 loss
B)$ 2,000 loss
C)$ 1,000 gain
D)$ 2,000 gain
E)$16,000 gain

Question 43

In September 2013,Eduardo sells stock he purchased in October 2012 at a gain of $5,000.If Eduardo is in the 10% marginal tax rate bracket and he has no other capital asset sales in 2013,what is his tax on the sale of the stock?

A)$ - 0 -
B)$ 500
C)$ 750
D)$1,000
E)$1,250

Question 44

Omicron Corporation had the following capital gains and losses for 2011 through 2013:
$\begin{array} { l }2011&2012&2013\\\$15,000&\$(30,000)&\$60,000\end{array}$

Omicron's net capital gain for 2013 is:

A)$20,000
B)$30,000
C)$45,000
D)$60,000

Question 45

A capital asset includes which of the following?
I)real estate held as an investment in rental property.
II)the copyright to a song held by its writer.
III)real estate used in a trade or business.
IV)accounts receivable.

A)Only statement I is correct.
B)Statements I and II are correct.
C)Statements III and IV are correct.
D)Statements I, II, and III are correct.
E)Statements I, II, III, and IV are correct.

Question 46

Serenity has the following capital gains and losses for the current year:
$\begin{array}{lr}\text { Short-term capital loss } & \$(8,000) \\\text { Long-term capital gain } & 3,000 \\\text { Collectible gain } & 2,000 \\\text { Collectible loss } & (4,000)\end{array}$
If Serenity is single and has taxable income from other sources of $75,000,what is the impact of her capital gains and losses on her income tax liability?

A)$ 690 decrease.
B)$ 750 decrease.
C)$ 840 decrease.
D)$1,050 decrease.
E)$1,960 decrease.

Question 47

Long-term capital gain classification is advantageous to taxpayers because of which of the following?
I)Long-term capital gains are generally taxed at a lower rate than ordinary income.
II)Part of a long-term capital game is excluded from income.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 48

William has the following capital gains and losses for the current year:
$$\begin{array} { l r } \text { Short-term capital gain } & \$ 10,000 \\\text { Short-term capital loss } & ( 3,000 ) \\\text { Long-term capital gain } & 5,000\end{array}$$
What is William's net capital gain or loss position for the year?

A)Short-term capital gain $7,000; Long-term capital gain $5,000.
B)Short-term capital gain $10,000; Long-term capital gain $2,000.
C)Short-term capital gain $7,000; Long-term capital gain $2,000.
D)Short-term capital gain $10,000; Long-term capital gain $5,000

Question 49

Gabrielle has the following gains and losses for the current year:
Short-term capital loss
$(8,000)
Long-term capital gain
3,000
Section 1231 gain
3,000
Section 1231 loss
(5,000)
What is Gabrielle's net capital gain or loss position for the year?

A)$7,000 net short-term capital loss.
B)$3,000 net short-term capital gain.
C)$5,000 net short-term capital loss.
D)$3,000 net short-term capital gain.

Question 50

In July 2013,Hillary sells a stamp from her stamp collection at a gain of $500.Hillary purchased the stamp in 2009.If Hillary is in the 25% marginal tax rate bracket and has no other capital asset sales in 2013,what is her tax on the sale of the stamp?

A)$ - 0 -
B)$ 25
C)$ 50
D)$ 75
E)$125

Question 51

Melissa sells stock she purchased in 2003 for a $7,500 gain in 2013.In August 2013,she also sells land she purchased as an investment in December 2012 at a loss of $12,000.
I)Melissa's tax on the $7,500 gain is $1,125.
II)Melissa has a deductible capital loss of $3,000 in 2013.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 52

Terry receives investment property from her mother as a gift in 2013.Her mother paid $15,000 for the property in 2010,and it is valued at $18,000 on the date of the gift.Terry sells the property eight months later for $16,000.Terry's gain or loss is

A)Short-term ordinary loss.
B)Short-term capital gain.
C)Short-term capital loss.
D)Long-term ordinary gain.
E)Long-term capital gain.

Question 53

Corky receives a gift of property from her Aunt Cynthia.Cynthia purchased the property 17 years ago for $375,000.On the date of the gift,the property is appraised at $500,000.What is Corky's holding period for the property if she sells it one month after the gift was completed?

A)Short-term.
B)Long-term.
C)Holding period is not relevant since the gain is ordinary.
D)Holding period classification cannot be determined without knowing the selling price.

Question 54

Phi Corporation had the following capital gains and losses for 2011 through 2013:
$\begin{array} { l }2011&2012&2013\\\$15,000&\$(40,000)&\$10,000\end{array}$

I. Phi can deduct a loss of $\$ 15,000$ in 2013 .
II. Phi will carry forward a $\$ 15,000$ capital loss to 2014 .

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 55

Sigma Corporation had the following capital gains and losses for 2009 through 2013:
$\begin{array} { l }2009&2010&2011&2012&2013\\\$30,000&\$(20,000)&\$15,000&\$(30,000)&\$60,000\end{array}$

Sigma's net capital gain for 2013 is:

A)$25,000
B)$30,000
C)$35,000
D)$55,000
E)$60,000

Question 56

In July 2013,Harriet sells a stamp from her stamp collection at a gain of $500.Harriet purchased the stamp in 2008.If Harriet is in the 33% marginal tax rate bracket and has no other capital asset sales in 2013,what is her tax on the sale of the stamp?

A)$ 50
B)$ 75
C)$125
D)$140
E)$165

Question 57

All of the following are capital assets with the exception of

A)Stocks and bonds.
B)Office furniture used in a business
C)Monet painting privately held.
D)Apartment building held for investment.
E)Personal residence.

Question 58

LeRoy has the following capital gains and losses for the current year:
$\begin{array}{lc}\text { Short-term capital gain } & \$ 10,000 \\\text { Collectible loss } & (3,000) \\\text { Long-term capital gain } & 5,000\end{array}$
If LeRoy is single and has taxable income from other sources of $52,000,what is the tax on his capital gains?

A)$1,800
B)$2,800
C)$2,910
D)$3,000

Question 59

Brenda sells stock she purchased in 2003 for a $7,500 gain in 2013.In August 2013,she also sells land she purchased as an investment in December 2012 at a loss of $9,000.
I)For 2013,Brenda's tax on the $7,500 gain is $1,125.
II)Brenda can deduct $3,000 of the $9,000 loss in 2013.
III)For 2013,Brenda has a net long-term capital loss of $9,000.
IV)Brenda can only deduct a capital loss of $1,500 in 2013.

A)Statements I and II are correct.
B)Statements I, II and IV are correct.
C)Only statement II is correct.
D)Only statement IV is correct.
E)Statements I, II and III are correct.

Question 60

A taxable entity has the following capital gains and losses in 2013:
$\begin{array} { l } \text {Short-term capital loss }&\$(22,000)\\ \text {Long-term capital gain }&15,000\\\end{array}$

I
If the entity is an individual,a $3,000 deduction is allowed in 2013.
II)If the entity is a corporation,a $7,000 deduction is allowed in 2013.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 61

Tonya purchased 500 shares of Home Depot,Inc.common stock on December 13,2010,at a cost of $3,600.She paid a commission of $150 on the purchase.On February 18,2012,she received 250 shares of Home Depot,Inc.common stock as a tax-free dividend.Tonya sells 600 shares for $3,700 on January 8,2013,and pays a $100 commission on the sale.Tonya's gain (loss)on the sale is characterized as:

A)Long-term capital gain of $600.
B)Long-term capital gain of $500; short-term capital gain of $100.
C)Long-term capital loss of $50.
D)Short-term capital gain of $600.

Question 62

When a security becomes worthless
I)no loss can be deducted because a realization has not occurred.
II)the measure of the loss is the adjusted basis of the securities.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 63

Pamela purchased 500 shares of Qualified Small Business Stock (QSB)for $900,000 on October 2,2012.On November 29,2017,she sells the stock for $1,000,000.Pamela also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000.Pamela has $100,000 of other income.Which of the following statements about the stock sale is/are true?
I)Pamela will pay no tax on the two stock sales.
II)Pamela can only deduct $3,000 of the $10,000 loss on the sale of the stock.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 64

When securities are sold and the securities were purchased on different dates and at different prices
I)the basis of the shares may be determined on a first-in,first-out basis.
II)the basis of the shares may be determined on a last-in,first-out basis.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 65

The exclusion of a percentage of the capital gain realized on the sale of qualified small business stock acquired after September 27,2010,and before January 1,2014,results in an effective tax rate on these capital gains of

A)0%
B)7.0%
C)14.0%
D)15.0%
E)28.0%

Question 66

A taxable entity has the following capital gains and losses in 2013:
$\begin{array} { l } \text {Short-term capital loss }&\$(20,000)\\ \text {Long-term capital gain }&13,000\\\end{array}$

I.If the entity is an individual,a $7,000 deduction is allowed in 2013.
II.If the entity is a corporation,no deduction is allowed in 2013.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 67

Victor bought 100 shares of stock of Wabash Manufacturing Corporation from an unrelated individual paying $1 per share on December 20,2012.On April 17,2013,the corporation is declared bankrupt and the shares are deemed worthless.What is the amount and character of Victor's recognized loss as a result of the bankruptcy?

A)$100 short-term capital loss.
B)$100 long-term capital loss.
C)$100 ordinary loss.
D)No gain or loss until the stock is sold.
E)The amount is $100, but the character is indeterminable from the information given.

Question 68

Raymond,a single taxpayer,has taxable income of $155,000 from all sources except capital gains.He has a $10,000 gain from the sale of qualified small business stock he acquired in 1995.What is the total tax saving Raymond receives because of any special treatment of his $10,000 long-term capital gain on small business stock?

A)$ 700
B)$1,150
C)$1,400
D)$2,100
E)$2,800

Question 69

Tracey sells General Electric stock (owned 10 years)for a $40,000 gain in the current year.In addition,she has a loss of $20,000 on the sale of one acre of land used in her trade or business.The land was purchased five years ago.Tracey's net capital gain (loss)for the current year is:

A)$ (20,000)
B)$ - 0 -
C)$ 20,000
D)$ 40,000

Question 70

Capital gain and loss planning strategies include
I)the optimal action of using capital gains to reduce an individual taxpayer's net capital loss for a year to zero.
II)selling enough capital assets to create a $3,000 capital loss.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 71

Tory sells General Electric stock (owned 10 years)for a $40,000 gain in the current year.In addition,she had a loss of $20,000 on the sale of one acre of land used in her trade or business.The land was purchased five years ago.Tory's net Section 1231 gain (loss)for the current year is:

A)$ - 0 -
B)$ 20,000
C)$ (20,000)
D)$ 40,000

Question 72

Sidney,a single taxpayer,has taxable income of $45,000 from all sources except capital gains.He has a long-term capital gain of $1,000.What is the actual tax savings Sidney receives because of any special treatment of his $1,000 long-term capital gain?

A)$ -0-
B)$ 50
C)$100
D)$150
E)$250

Question 73

Sybil purchased 500 shares of Qualified Small Business Stock (QSB)for $25,000 on March 2,2002.On November 29,2013,she sells the stock for $125,000.Sybil also sells 100 shares of stock she acquired two years ago realizing a gain of $20,000.Sybil has $100,000 of other income.Which of the following statements about the stock sale is/are true?
I)The tax paid on Sybil's two stock sales is $17,000.
II)The tax rate on the $20,000 gain is 15%.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 74

Sally owns 700 shares of Fashion Styles Clothing common stock.Sally purchased the 700 shares as follows:
$$\begin{array} { l c c } \text { Purchase Date } & \text { Number of Shares } & \text { Total Cost } \\\text { March } 2010 & 200 & \$ 2,000 \\\text { August } 2010 & 300 & \$ 3,600 \\\text { January } 2011 & 200 & \$ 3,000\end{array}$$
As of December 29,2013,Sally has not sold any securities.She needs to send a tuition payment of $5,200 to her daughter's boarding school in Zurich before year-end.Since the Fashion Styles Clothing stock is selling for $13 per share,Sally plans to dispose of 400 shares to cover the tuition.Ignoring commissions and transaction costs,what is the optimal tax result of selling 400 shares?

A)$- 0 - gain or loss.
B)$200 long-term capital loss.
C)$100 long-term capital gain.
D)$800 long-term capital loss
E)$800 long-term capital gain

Question 75

Santana purchased 200 shares of Neffer,Inc.Common Stock on November 13,2012,for $3,400 and paid a $200 commission.On December 28,2012,Santana received a $2 per share cash dividend from Neffer.On June 17,2013,Neffer declares and distributes a 2 for 1 stock split.On August 4,2013,Santana purchased an additional 300 shares of Neffer,Inc.Common Stock for $4,200 plus a $300 commission.On November 22,2013,Santana sells 500 shares of Neffer,Inc.stock for $6,000 and pays a $400 commission on the sale.Santana's gain (loss)on the sale is

A)$ 500 loss
B)$ 500 gain
C)$2,700 loss
D)$2,000 gain
E)$3,600 loss

Question 76

Cheryl purchased 500 shares of Qualified Small Business Stock (QSB)for $900,000 on March 2,2011.On November 29,2016,she sells the stock for $1,000,000.Cheryl also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000.Cheryl has $100,000 of other income.Which of the following statements about the stock sale is/are true?
I)The tax paid on Cheryl's two stock sales is $4,200.
II)Cheryl can only deduct $3,000 of the $10,000 loss on the sale of the stock.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 77

The exclusion of a percentage of the capital gain realized on the sale of qualified small business stock acquired after February 17,2009,and before September 27,2010,results in an effective tax rate on these capital gains of

A)7.0%
B)14.0%
C)15.0%
D)27.0%
E)30.0%

Question 78

Rachael purchased 500 shares of Qualified Small Business Stock (QSB)for $900,000 on March 2,2008.On November 29,2013,she sells the stock for $1,000,000.Rachael also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000.Which of the following explain(s)tax consequences of the QSB stock sale?
I)The effective tax rate applied to the net gain on the sale of the QSB stock is 15%.
II)Rachael nets her $10,000 loss with her $100,000 gain before applying her exclusion rate.
III)Rachael is eligible for a 50% exclusion of the gain from the QSB stock sale.
IV)The QSB stock is QSB stock partly because Rachael held the stock for the required 3-year minimum.

A)Statements I and II are correct.
B)Statements II and III are correct.
C)Statements III and IV are correct.
D)Statements I, II, and III are correct.
E)Statements I, II, III, and IV are correct.

Question 79

Which of the following is not a capital asset?

A)Office building used as a rental property by a real estate professional..
B)Antique automobile.
C)Land held for investment.
D)Stock held for investment.

Question 80

Dwight,a single taxpayer,has taxable income of $75,000 from all sources except capital gains.He has a collectibles gain of $1,000.What is the actual tax saving Dwight receives because of any special treatment of his $1,000 collectibles gain?

A)$ -0-
B)$ 15
C)$130
D)$150
E)$280