Question 1

Trista,a taxpayer in the 33% marginal tax bracket sold the following capital assets this year:
  What is the amount of and nature of (LT or ST)capital gain or loss? Be specific as to the rates at which gains,if any,are taxed.

Accepted Answer

The answer of Trista,a taxpayer in the 33% marginal tax...

Question 2

Candice owns a mutual fund that reinvests her dividends and capital gains earned during the year.The mutual fund reported to her that her share of earnings was: $500 in dividends,$1,500 in short-term net capital gains,and $1,300 in long-term net capital gains.She reported the items on her tax return and paid the appropriate tax on these earnings.If her basis in the fund was $25,000 at the beginning of the year,what is her basis at the end of the year?

Accepted Answer

Her total earnings from the mutual fund are $3,300 ($500 in dividends + $1,500 in short-term net capital gains + $1,300 in long-term net capital gains). Since she reinvests her earnings, her basis in the mutual fund increases by the total earnings. Therefore, her basis at the end of the year is $28,300 ($25,000 beginning basis + $3,300 in earnings). 
Option D is correct.

Question 3

Niral is single and provides you with the following tax information for 2016:
  Compute her tax liability.[Show all calculations in good form.]

Accepted Answer

The answer of Niral is single and provides you with...

Question 4

Corporate taxpayers may offset capital losses only against capital gains and may carry excess losses back three years and then forward five years.

Accepted Answer

This is correct according to US tax laws. Corporate taxpayers are limited in their ability to offset capital losses, but they can carry excess losses back for three years and forward for five years to help offset capital gains.

Question 5

Jade is a single taxpayer in the top tax bracket,with salary of $450,000 and investment income of $100,000.She is considering the sale of some shares of stock which will result in a $50,000 gain.She purchased the shares three years ago.Taking all taxes into account,how much tax will she pay due to this gain?

Accepted Answer

The answer of Jade is a single taxpayer in the...

Question 6

Mike sold the following shares of stock in 2016:
  What are the tax consequences of these transactions,assuming his marginal tax rate is (a)33% and (b)39.6%? Ignore the medicare tax on net investment income.

Accepted Answer

The answer of Mike sold the following shares of stock...

Question 7

During the current year,Nancy had the following transactions:  What is the amount of her capital loss deduction for the current year,and what is the amount and character of her capital loss carryover?

Accepted Answer

The current year's net capital loss is $7,000 ([$12,000 (sale of stock) - $17,000 (cost basis)]). Since Nancy has no capital gains for the current year, her maximum capital loss deduction is $3,000. The remaining $4,000 loss can be carried over to future years, and it will be a short-term capital loss.

Question 8

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

Accepted Answer

The question is asking for the amount that Gertie reports after gains and losses are offset. To calculate this, we need to subtract Gertie's NLTCG from her NSTCL.

$9,000 - $5,500 = $3,500

Therefore, the correct answer is B) $3,500.

Question 9

Maya expects to report about $2 million of AGI and $1.7 million of taxable income.Her AGI is composed of $1.25 million of salary,and the balance is investment income.Maya is thinking about selling some stock before year-end.She purchased the stock three years ago and expects to recognize a $500,000 gain.How much federal tax will she pay in total on the stock gain?

Accepted Answer

A)The gain will be subject to the 20% income tax rate on the LTCG and the 3.8% Medicare tax on investment income.$500,000 × 23.8% = $119,000.

Question 10

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock.Abra Corporation will pay taxes on $97,000 of taxable income.

Accepted Answer

The answer of Abra Corporation generated $100,000 of taxable income...

Question 11

Chen had the following capital asset transactions during 2016:
  What is the adjusted net capital gain or loss and the related tax due to the above transactions,assuming Chen has a 25% marginal tax rate?

Accepted Answer

The answer of Chen had the following capital asset transactions...

Question 12

Olivia,a single taxpayer,has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Accepted Answer

Medicare tax is 1.45% on all wages and self-employment income. Investment income is subject to an additional 3.8% Medicare tax for taxpayers earning more than $200,000 (single filers). Olivia is subject to both taxes on her $60,000 of investment income, which comes out to be $2,280 (1.45% + 3.8% = 5.25% x $60,000). Therefore, the correct answer is option B.

Question 13

Melanie,a single taxpayer,has AGI of $220,000 which includes $160,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Accepted Answer

Medicare tax is levied on earned income only, which includes salaries and wages, and does not include investment income. Therefore, Melanie will not have to pay any Medicare tax on her investment income of $60,000. The Medicare tax rate is 1.45%, so Melanie's Medicare tax liability is calculated as:

$160,000 x 1.45% = $2,320

Therefore, Melanie will pay Medicare tax of $2,320 on her salary income. Option C is the correct choice.

Question 14

Kendrick,who has a 33% marginal tax rate,had the following results from transactions during the year:  After offsetting the STCL,what is (are)the resulting gain(s)?

Accepted Answer

The answer of Kendrick,who has a 33% marginal tax rate,had...

Question 15

Tina,whose marginal tax rate is 33%,has the following capital gains this year:
  What is the increase in income tax caused by these items (ignore the Medicare tax on net investment income)?

Accepted Answer

The answer of Tina,whose marginal tax rate is 33%,has the...

Question 16

Topaz Corporation had the following income and expenses during the current year:  What is Topaz's taxable income?

Accepted Answer

The answer of Topaz Corporation had the following income and...

Question 17

Unlike an individual taxpayer,the corporate taxpayer does not utilize the 25% and 28% specialty capital gain rates,but it does apply the 15% tax rate to adjusted net capital gain.

Accepted Answer

The answer of Unlike an individual taxpayer,the corporate taxpayer does...

Question 18

Max sold the following capital assets this year:
  What is the amount of and nature of (LT or ST)capital gain or loss?

Accepted Answer

The answer of Max sold the following capital assets this...

Question 19

In the current year,ABC Corporation had the following items of income,expense,gains,and losses:  What is taxable income for the year?

Accepted Answer

The answer of In the current year,ABC Corporation had the...

Question 20

Amanda,whose tax rate is 33%,has NSTCL of $25,000,a $30,000 LTCG from sale of a rare coin held 15 months and a $18,000 LTCG from the sale of stock held for three years.By what amount will Amanda's tax liability increase?

Accepted Answer

B)The $25,000 NSTCL is offset against the $25,000 of the collectibles gain in the 28% group.Amanda's tax liability increases by $4,100 [($5,000 × .28)+ ($18,000 × .15)].

Quiz 5: Property Transactions: Capital Gains and Losses

Trista,a taxpayer in the 33% marginal tax bracket sold the following capital assets this year: What is the amount of and nature of (LT or ST)capital gain or loss? Be specific as to the rates at which gains,if any,are taxed.

Niral is single and provides you with the following tax information for 2016: Compute her tax liability.[Show all calculations in good form.]

Corporate taxpayers may offset capital losses only against capital gains and may carry excess losses back three years and then forward five years.

Mike sold the following shares of stock in 2016: What are the tax consequences of these transactions,assuming his marginal tax rate is (a)33% and (b)39.6%? Ignore the medicare tax on net investment income.

During the current year,Nancy had the following transactions: What is the amount of her capital loss deduction for the current year,and what is the amount and character of her capital loss carryover?

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock.Abra Corporation will pay taxes on $97,000 of taxable income.

Chen had the following capital asset transactions during 2016: What is the adjusted net capital gain or loss and the related tax due to the above transactions,assuming Chen has a 25% marginal tax rate?

Olivia,a single taxpayer,has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Melanie,a single taxpayer,has AGI of $220,000 which includes $160,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of

Kendrick,who has a 33% marginal tax rate,had the following results from transactions during the year: After offsetting the STCL,what is (are) the resulting gain(s) ?

Tina,whose marginal tax rate is 33%,has the following capital gains this year: What is the increase in income tax caused by these items (ignore the Medicare tax on net investment income)?

Topaz Corporation had the following income and expenses during the current year: What is Topaz's taxable income?

Unlike an individual taxpayer,the corporate taxpayer does not utilize the 25% and 28% specialty capital gain rates,but it does apply the 15% tax rate to adjusted net capital gain.

Max sold the following capital assets this year: What is the amount of and nature of (LT or ST)capital gain or loss?

In the current year,ABC Corporation had the following items of income,expense,gains,and losses: What is taxable income for the year?

Amanda,whose tax rate is 33%,has NSTCL of $25,000,a $30,000 LTCG from sale of a rare coin held 15 months and a $18,000 LTCG from the sale of stock held for three years.By what amount will Amanda's tax liability increase?