Question 1

Andrea died with an unused capital loss carryover of $3,300. The carryover

Accepted Answer

Capital loss carryovers expire upon the taxpayer's death and cannot be transferred to heirs or carried back.

Question 2

Tina, whose marginal tax rate is 32%, 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 32%,...

Question 3

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400. As a result, Stella can offset

Accepted Answer

Stella can offset $3,000 of ordinary income with the STCL and carry forward the remaining $2,200 of STCL and the $2,400 of LTCL.

Question 4

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 answer of Gertie has a NSTCL of $9,000 and...

Question 5

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

Candice's basis in the mutual fund increases by the amount of reinvested dividends and capital gains. Her basis at the end of the year is $25,000 + $500 (dividends) + $1,500 (short-term gains) + $1,300 (long-term gains) = $28,300.

Question 6

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...

Question 7

Jade is a single taxpayer in the top tax bracket, with salary of $500,000 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 8

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 1.45% of AGI. Melanie's AGI is $220,000, so her Medicare tax is $220,000 x 1.45% = $3,190. However, Medicare tax is only applied to wages, salaries, tips, and other compensation. Investment income is not subject to Medicare tax. Therefore, Melanie's Medicare tax is $0.

Question 9

Amanda, whose tax rate is 32%, 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

The answer of Amanda, whose tax rate is 32%, has...

Question 10

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...

Question 11

Kendrick, whose tax rate is 32%, 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, whose tax rate is 32%, had...

Question 12

Trista, a taxpayer in the 32% 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 a taxed.

Accepted Answer

The answer of Trista, a taxpayer in the 32% marginal...

Question 13

Joel has four transactions involving the sale of capital assets during the year resulting in a STCG of $5,000, a STCL of $12,000, a LTCG of $1,800 and a LTCL of $1,000. As a result of these transactions, Joel will

Accepted Answer

The answer of Joel has four transactions involving the sale...

Question 14

Chen had the following capital asset transactions during 2018:  What is the adjusted net capital gain or loss and the related tax due to the above transactions, assuming Chen ha marginal tax rate?

Accepted Answer

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

Question 15

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

The stock gain is a long-term capital gain, taxed at a maximum rate of 23.8% (20% capital gains tax rate plus 3.8% net investment income tax) for high-income earners like Maya. Therefore, $500,000 x 23.8% = $119,000.

Question 16

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

The answer of Olivia, a single taxpayer, has AGI of...

Question 17

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 the U.S. tax law. Corporate taxpayers are limited to offsetting capital losses against capital gains, and any excess losses can be carried back three years and then forward for up to five years.

Question 18

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 19

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 he loss carryover?

Accepted Answer

The answer of During the current year, Nancy had the...

Question 20

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...

Quiz 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Andrea died with an unused capital loss carryover of $3,300. The carryover

Tina, whose marginal tax rate is 32%, 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)?

Stella has two transactions involving the sale of capital assets during the year resulting in a STCL of $5,200 and LTCL of $2,400. As a result, Stella can offset

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

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.

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

Amanda, whose tax rate is 32%, 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?

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

Kendrick, whose tax rate is 32%, had the following results from transactions during the year: After offsetting the STCL, what is (are) the resulting gain(s) ?

Trista, a taxpayer in the 32% 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 a taxed.

Joel has four transactions involving the sale of capital assets during the year resulting in a STCG of $5,000, a STCL of $12,000, a LTCG of $1,800 and a LTCL of $1,000. As a result of these transactions, Joel will

Chen had the following capital asset transactions during 2018: What is the adjusted net capital gain or loss and the related tax due to the above transactions, assuming Chen ha 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

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

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.

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 he loss carryover?

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