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Flashcards in TPRO Deck (62)
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1

For the year 2013 Diana Clark had salary income of $38,000. In addition, she had the following capital transactions during the year:

Long-term capital gain    $14,000

Short-term capital gain       6,000

Long-term capital loss       (4,000)

Short-term capital loss       (8,000)

There were no other items includible in her gross income. What is her adjusted gass income for 2013?

$46,000

2

For cash-basis taxpayer, gain or loss on year-end sale of stock arises on the 

Trade date.

3

An individual's losses on transactions entered into for personal purposes are deductible only

The losses qualify as casualty or theft losses. 

4

Murd Corporation, a domestic corporation, acquired a interest in the Drum Company in 2011 for $30,000. During 2014, the stock of Drum was declared worthless. What type and amount of deduction should Murd take for 2014? 

Ordinary loss of $30,000. 

5

Folly Corporation, which was formed in 2009, had $40,000 of net Sec. 1231 gain for its 2013 calendar year. Its net SEC. 1231 gains and losses for its preceding 3 years were as follows:

Year Sec.     1231 results 

2010             Loss of $15,000

2011              Loss of $20,000

2012             Gain of $5,000

As result, Folly Corporation's 2012 net Sec. 1231 gain would be characterized as

A net long-term capital gain of $10,000, and ordinary income of $30,000.

6

A warehouse owned by Greg Bell, a calendar-year taxpayer, was destroyed by fire on February 15, 2012. Sell received a check from his insurance company in full settlement of his claim on April 19, 2013. In order to qualify for nonrecognition of gain on this involuntary conversion, what is the latest date for Bell to acquire qualified replacement property? 

December 31, 2015 

7

Thayer Corporation purchased an apartment building on January 10, 2008 for $200,000. The building was depreciated using the straight-line method. On February 20, 2014, the building was sold for $220,000, when the asset balance net of accumulated depreciation was $170,000. On its 2014 tax return, Thayer Corporation should report

Section 1231 gain of $44,000 and ordinary income of $6,000. 

8

Joseph Kurtz exchanged land that he held for 4 years as an investment, with a tax basis of $36,000, for similar land valued at $40,000 which was owned by Adrian Flemming. In connection with this transaction, Kurtz assumed Flemming's $10,000 mortgage and Flemming assumed Kurtz's $12,000 mortgage. As a result of this transaction Kurtz should report a long-term capital gain of 

$2,000 

9

An individual had the following capital gains and losses for the year:

Short-term capital loss                                 $70,000

Long-term gain (unrecaptured Section 1

250 at 25%)                                                   56,000

Collectibles gain (28% rate)                             10,000

Long-term gain (15% rate)                               20,000

What will be the net gain (loss) reported by the individual and at what applicable tax rate(s)? 

 Long-term gain of $16,000 at the 15% rate. 

10

On January 8, 2013, Sam Meyer, age 52 and single, sold for $320,000 his personal residence which had been his principal residence for the past 20 years and had an adjusted basis of $60,000. On May I, 2013, he purchased a new residence for $420,000. For 2013, Meyer should recognize a gain on the sale of his residence of

$10,000

11

In the current year, Tatum exchanged farmland for an office building. The farmland had a basis of $250,000, a fair market value (FMV) of $400,000, and was encumbered by a $120,000 mortgage. The office building had an FMV of $350,000 and was encumbered by a $70,000 mortgage. Each party assumed the other's mortgage. What is the amount of Tatum's recognized gain?

$ 50,000

12

Taylor owns 1,000 shares of Media Corporation common stock with a basis of $22,000 and a fair market value of $33,000. Media paid 10% nontaxable common stock dividend. What is the basis for each share of Media common stock owned by Taylor after receipt of the dividend?

 $20

13

On July 1, 2013, Daniel Wright owned stock (held for investment) purchased 2 years earlier at a cost of $10,000 and having a fair market value of $7,000. On this date he sold the stock to his son, William, for $7,000. William sold the stock for $6,000 to an unrelated person on November I, 2013. How should William report the stock sale on his 2013 tax return?

As short-term capital loss of $1,000. 

14

Gibson purchased stock with a fair market value of $14,000 from Gibson's adult child for $12,000. The child's cost basis in the stock at the date of sale was $16,000. Gibson sold the same stock to an unrelated party for $18,000. What is Gibson's recognized gain from the sale?

$2,000 

15

A heavy equipment dealer would like to trade some business assets in nontaxable exchange. Which of the following exchanges would qualify as nontaxable?

a. Investment securities for antiques to be held as investments.

b. A road grader held in inventory for another road grader.

c. A corporate office building for a vacant lot.  

d. The company jet for a large truck to be used in the corporation.

A corporate office building for a vacant lot.

16

If an individual incurs a loss on a nonbusiness deposit as the result of the insolvency of bank, credit union, or other financial institution, the individual's loss on the nonbusiness deposit may be deducted in any one of the following ways except

a. Miscellaneous itemized deduction.

b. Casualty loss.

c. Short-term capital loss.

d. Long-term capital loss. 

 Long-term capital loss. 

17

Which of the following sales should be reported as capital gain?

a. Sale of business equipment.

b. Real property subdivided and sold by dealer.

c. Sale of inventory.

d. Government bonds sold by an individual investor.

 Government bonds sold by an individual investor.

18

On March 10, 2013, James Rogers sold 300 shares of Red Company common stock for $4,200. Rogers acquired the stock in 2011 at a cost of $5,000. On April 4, 2013, he repurchased 300 shares of Red Company common stock for $3,600 and held them until July 18, 2013, when he sold them for $6,000. How should Rogers report the above transactions for 2013? 

A long-term capital gain of $1,600. 

19

At the beginning of the current tax year, the following assets were among those owned by Eli York:

Date acouired     Asset                             Cost

Jan. 2011             Personal residence        $100,000

Feb. 2012           Stock of listed corp.             8,000

Dec. 2013            Stock of listed corp.            3,000

What is the total amount of York's capital assets? 

$111,000 

20

David Jones purchased land and building which will be used in connection with Jones' business. The costs associated with this purchase are as follows:

Cash down payment            $50,000

Mortgage on property          370,000

Survey costs                            3,000

Title and transfer taxes             3,500

Charge for hookup of

gas, water, and sewer lines       1,000

Back property taxes owed

by the seller that were paid

by Jones                                  5,000

  What is Jones' tax basis for the land and building? 

$432,500 

21

In 2011, Bill Yao bought shares of stock as an investment at a cost of $20,000. During 2012, when the fair market value was $15,000, Bill gave the stock to his son, Tom. Tom sold the stock in 2014 for $12,000. Tom's holding period of the stock for purposes of determining his loss

Started in 2013

22

Pomplin, an individual calendar-year taxpayer, purchased 100 shares of Trix Corporation common stock for $10,000 on October 10, 2013, and an additional 50 shares of Trix Corporation common stock for $4,000 on December 15, 2013. On November 8, 2013, Pomplin sold the 100 shares purchased on October 10, 2013, for $7,000. What is the amount of Pomplin's recognized loss for 2013 and what is the basis for his remaining 50 shares of Trix Corporation stock? 

 $3,000 recognized loss; $4,000 basis for his remaining stock.

23

On August 20, 2012, Roger Carlson paid $60,000 for 250 shares of Hewlett Corp. common stock. Roger received a nontaxable stock dividend of 50 new common shares in July 2013. On September 30, 2013, Roger sold the 50 new shares for $13,000. What is Roger's reportable gain on the sale of the 50 new shares?

$ 3,000 long-term capital gain. 

24

On January 5, 2013, Norman Harris purchased for $6,000, 100 shares of Campbell Corporation common stock. On July 8, 2013, he received a nontaxable stock dividend of 10 shares of Campbell Corporation $100 par value preferred stock. On that date, the market values per share of the common and preferred stock were $75 and $150, respectively. Harris' tax basis for the common stock after the receipt of the nontaxable preferred stock dividend is

$5,000

25

Wilson made a gift of property to Thompson. Wilson's basis in the property was $2,400.  The fair market value at the time of the gift was $2,800. Thompson sold the property for $5,000. What was the amount of Thompson's gain on the disposition? 

$2,600

26

For assets acquired in 2014, the holding period for determining long-term capital gains and losses is more than

 12 months. 

27

Rose Budd owns of the outstanding stock of Kee Corp. During 2014 Kee sold a machine to Rose for $30,000. This machine had an adjusted tax basis of $92,000 and had been owned by Kee for 3 years. What is the allowable loss that Kee can claim in its 2014 income tax return?

$0

28

In 2013, Mr. Trader had net long-term capital loss of $13,000 and net short-term capital gain of $5,000. What are his 2013 capital loss deduction and carryover to 2014 respectively?

 $3,000 and $5,000. 

29

Rick Berger owned a parcel of investment real estate that had an adjusted basis of $30,000 and fair market value of $47,000. During the current year, Berger exchanged his investment real estate for the items of property listed below.

Land to be held for investment

(fair market value)                                $35,000

A motorcycle to be held for

personal use (fair market value)              5,000

Cash                                                       7,000

What is Rick Berger's recognized gain and basis in his new investment real estate?

$12,000 gain recognized; $30,000 basis for real estate.

30

In like-kind exchange of an asset for another asset, no taxable gain will be recognized if the transaction consists of the exchange of

Apartment building held for business use for land held for investment.