Question 1

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?

Accepted Answer

To calculate net capital gain or loss, we first need to combine the gains and losses of the same type (short-term and long-term). For short-term, we have a total gain of $12,000 and a total loss of $7,000. Therefore, the net short-term capital gain is $5,000. For long-term, we have a total gain of $3,000 and a total loss of $6,000. Therefore, the net long-term capital loss is $3,000. Then, we combine the net gains or losses of each type to get the overall net gain or loss. In this case, the net short-term capital gain of $5,000 minus the net long-term capital loss of $3,000 gives us a net capital gain of $2,000.

Question 2

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

Accepted Answer

The answer of Joyce receives investment property from her mother...

Question 3

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?

Accepted Answer

The answer of In September 2013,Eduardo sells stock he purchased...

Question 4

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:

Accepted Answer

In 2012, Omicron had a capital loss of $30,000, which can be carried forward to offset future capital gains. In 2013, Omicron had a capital gain of $60,000. After applying the $30,000 loss carryforward from 2012, the net capital gain for 2013 is $60,000 - $30,000 = $30,000.

Question 5

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.

Accepted Answer

The answer of A capital asset includes which of the...

Question 6

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?

Accepted Answer

The answer of Serenity has the following capital gains and...

Question 7

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.

Accepted Answer

Long-term capital gains are typically taxed at a lower rate than ordinary income, making them advantageous for taxpayers. However, there is no general exclusion of a portion of long-term capital gains from income; instead, the benefit comes from the lower tax rates applied to these gains.

Question 8

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?

Accepted Answer

The answer of William has the following capital gains and...

Question 9

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?

Accepted Answer

To calculate Gabrielle's net capital gain or loss position, we must first offset the long-term capital gain with the section 1231 loss. This gives us a net section 1231 loss of $2,000. We can then offset this net section 1231 loss with the short-term capital loss, resulting in a net short-term capital loss of $10,000 ($2,000 + $8,000). Therefore, the answer is option C, $5,000 net short-term capital loss.

Question 10

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?

Accepted Answer

The answer of In July 2013,Hillary sells a stamp from...

Question 11

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.

Accepted Answer

The answer of Melissa sells stock she purchased in 2003...

Question 12

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

Accepted Answer

The answer of Terry receives investment property from her mother...

Question 13

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?

Accepted Answer

Corky's holding period includes the time the property was held by Aunt Cynthia, because it was a gift and not inherited property. Since Cynthia held it for 17 years before gifting it, and Corky sells it one month after receiving it, the total holding period is over a year, making it long-term.

Question 14

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 .

Accepted Answer

The answer of Phi Corporation had the following capital gains...

Question 15

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:

Accepted Answer

Sigma Corporation can carry forward the net capital loss from 2012 to offset the capital gain in 2013. The net capital loss from 2012 is $30,000, which offsets part of the $60,000 gain in 2013, resulting in a net capital gain of $30,000. However, the $15,000 gain from 2011 can also be carried forward to offset the remaining loss from 2010, resulting in a net capital gain of $55,000 for 2013.

Question 16

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?

Accepted Answer

To calculate the tax on the sale, we need to first determine Harriet's cost basis for the stamp. Since she purchased it in 2008 and sold it in 2013, she held it for 5 years. Therefore, we can assume that her cost basis is the amount she paid for it in 2008.

Next, we need to calculate Harriet's capital gain on the sale. This is the difference between the sale price ($500) and her cost basis. Since we don't know her cost basis, we can't determine the exact amount of the capital gain. However, we do know that it must be less than $500, since that's the amount by which the sale price exceeded the cost basis.

Finally, we can calculate Harriet's tax on the capital gain using the capital gains tax rate for her marginal tax bracket. Since she is in the 33% marginal tax bracket, her tax on the capital gain will be 33% of the capital gain. Let's assume that the capital gain is $400 (the maximum possible amount, given the sale price of $500 and the fact that the tax on the gain can't exceed $165, which is 33% of $500). In that case, Harriet's tax on the gain would be:

$400 x 0.33 = $132

Since $132 is greater than the maximum possible tax of $165, we know that the capital gain must be less than $400. Let's assume that the capital gain is $300. In that case, Harriet's tax on the gain would be:

$300 x 0.33 = $99

Since $99 is less than the maximum possible tax of $165, we know that this is the correct answer. However, we need to remember that we assumed a specific capital gain amount ($300) in order to calculate the tax. In reality, the capital gain could be any amount less than $500, so we can't be absolutely certain of the exact tax amount. However, we can be reasonably certain that the answer is between $75 (which is 33% of $225, the maximum possible capital gain under the assumption that Harriet paid $275 for the stamp in 2008) and $140 (which is 33% of $425, the maximum possible capital gain under the assumption that Harriet paid $75 for the stamp in 2008). Thus, the best answer choice is D.

Question 17

All of the following are capital assets with the exception of

Accepted Answer

Office furniture used in a business is not considered a capital asset because it is used in the operation of a business and is classified as business property, which is subject to different tax treatment compared to capital assets like stocks, bonds, artworks, investment properties, and personal residences.

Question 18

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?

Accepted Answer

The answer of LeRoy has the following capital gains and...

Question 19

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.

Accepted Answer

The answer of Brenda sells stock she purchased in 2003...

Question 20

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.

Accepted Answer

Individuals can deduct up to $3,000 of net capital losses against ordinary income each year. Corporations cannot deduct capital losses against ordinary income; they can only offset them against capital gains.

Quiz 11: Property Dispositions

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?

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

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?

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 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.

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.

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?

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?

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.

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

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?

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 .

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:

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?

All of the following are capital assets with the exception of

Quiz 11: Property Dispositions

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?

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

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?

Omicron Corporation had the following capital gains and losses for 2011 through 2013: 201120122013$15,000$(30,000) $60,000\begin{array} { l }2011&2012&2013\\\$15,000&\$(30,000) &\$60,000\end{array}2011$15,000​2012$(30,000) ​2013$60,000​ Omicron's net capital gain for 2013 is:

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.

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.

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?

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?

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.

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

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?

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?

All of the following are capital assets with the exception of

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: