Question 1

What are three types of dispositions other than a sale? Briefly explain each.

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Question 2

What is depreciation recapture?

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Question 3

What is the difference between a realized gain or loss and a recognized gain or loss?

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Question 4

How are individual and corporate net capital losses treated?

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Question 5

What is the effect of the Section 1231 look-back rules?

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Question 6

In what order are capital gains subject to the 15%/20%, 25%, and 28% capital gains tax rates included in taxable income in the determination of the tax liability?

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Question 7

What is Section 291 recapture?

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Question 8

What are the basic differences between Section 1245 and Section 1250 depreciation recapture?

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Question 9

Carlos provides you with the following information for years 1 and 2, exclusive of capital loss carryovers:
STCG STCL LTCG LTCL
Year 1 0 $2,400 $400 $3,500
Year 2 $500 $ 700 $900 $1,000
Determine the amount and type of capital loss deduction each year, if any, and the carryover to the following year.

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Question 10

A taxpayer has the following gains and losses from property transactions completed in 2018. What is the effect on the taxpayer's taxable income and income tax if the taxpayer is (a) an individual or (b) a corporation?
Long-term capital gain $21,000
Section 1231 gain 10,000
Section 1231 loss 12,000
Short-term capital gain 3,000
Short-term capital loss 18,000

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Question 11

Abbey has the following gains and losses from property transactions. What is the effect on taxable income if Abbey is (a) a corporation; (b) an individual?
Long-term capital gain $2,000
Long-term capital loss 12,000
Section 1231 gain 20,000
Section 1231 loss 15,000
Short-term capital gain 3,000
Short-term capital loss 2,000

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Question 12

Taxpayer B has the following gains and losses from property transactions. What is the effect on the taxpayer's taxable income if Taxpayer B is (a) a corporation; (b) an individual?
Long-term capital gain $4,000
Long-term capital loss 7,000
Section 1231 gain 10,000
Section 1231 loss 6,000
Short-term capital gain 3,000
Short-term capital loss 6,000

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Question 13

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

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Question 14

Why is the character of a gain or loss on a disposition important? What are the three types of recognized gains or losses that determine their taxation?

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Question 15

What are the basic long-term capital gain tax rates and to which asset gains do they apply?

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Question 16

What did Congress do to close the loophole that allowed a person to exclude the gain on a primary personal residence and then later claim the exclusion on a vacation home that was owned at the same time as the primary residence?

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Question 17

When does an asset have a substituted basis?

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Question 18

Bill is single with taxable income of $95,000 and in the 24 percent tax bracket in 2018. During the year, he sold some stock held for 11 months at a $500 gain, gold coins held for two years at a $1,900 loss, antique toys held three years at a $2,200 gain, bonds held for two years for $400 gain, and some investment land held six months at a $300 loss. Determine Bill's net capital gain or loss and detail how it will be treated for tax purposes.

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Question 19

Janeway Corporation has ordinary taxable income of $127,000 in 2018 before consideration of any of the following property transactions. It sold two blocks of stocks held for investment: one yielded a short-term capital gain of $8,000 and the other a long-term capital loss of $14,000. In addition, it sold four pieces of machinery used for three years for $30,000. The machines had cost $50,000 originally and had $35,000 of depreciation deductions taken. They also sold a building for $400,000 that they had purchased in 2000 for $390,000. The depreciation deductions up to the date of sale were $89,000. Determine the amount and type of the net gains and losses from the property transactions and Janeway Corporation's taxable income for 2018.

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Question 20

In what order are capital gains subject to the 15%/20%, 25%, and 28% capital gains included in taxable income in the determination of the tax liability?

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