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?
For cash-basis taxpayer, gain or loss on year-end sale of stock arises on the
An individual's losses on transactions entered into for personal purposes are deductible only
The losses qualify as casualty or theft losses.
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.
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.
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
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.
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
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.
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
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?
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?
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.
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?
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.
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.
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.
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.
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?
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?
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
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.
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.
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
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?
For assets acquired in 2014, the holding period for determining long-term capital gains and losses is more than
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?
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.
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
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.
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.
During 2014, Fred Good traded a tractor used solely in his construction business for another tractor for the same use. On the date of the trade, the old tractor had an adjusted basis of $3,000 and a fair market value of $3,300. He received in exchange $500 in cash and a smaller tractor with a fair market value of $2,800. Assuming Mr. Good recognized $300 gain on the transaction, what is his basis in the new tractor?
Greller owns 100 shares of Arden Corp., a publicly traded company, which Greller purchased on January 3, 2012, for $10,000. On January 2, 2013, Arden declared a 2-for-1 stock split when the fair market value (FMV) of the stock was $120 per share. Immediately following the split, the FMV of Arden stock was $62 per share. On February 1, 2014, Greller had his broker specifically sell the 100 shares of Arden stock received in the split when the FMV of the stock was $65 per share. What is the basis of the 100 shares of Arden sold?
On February 1, 2014, Rick Landerholm learned that he was bequeathed a baseball card collection under the will of his uncle, John. John had a basis in the baseball card collection of $2,000. Fair market value of the collection on January 19, 2014, the date of John's death, was $10,000 and had increased to $15,000 six months later. The executor of John's estate elected the alternate valuation for estate tax purposes. Rick sold the baseball card collection for $12,000 on March I, 2014, the date that the executor distributed the collection to him. Assuming that kick is not a dealer in baseball cards, Rick should treat the baseball collection as a
Long-term capital asset.
Dunn received 100 shares of stock as a gift from Dunn's grandparent. The stock cost Dunn's grandparent $32,000 and it was worth $27,000 at the time of the transfer to Dunn. Dunn sold the stock for $29,000. What amount of gain or loss should Dunn report from the sale of the stock?
In 2013 Studley Corporation, not a dealer in securities, realized taxable income of $30,000 from the operation of its business. Additionally in 2013, Studley realized a long-term capital loss of $12,000 from the sale of marketable securities. Studley had not realized any other capital gains or losses since it began operations. What is the proper treatment for the $12,000 long-term capital loss in Studley's income tax return?
Carry the $12,000 long-term capital loss forward 5 years, treating it as a short-term capital loss.
Starr, self-employed individual, purchased piece of equipment for use in Starr's business. The costs associated with the acquisition of the equipment were
Purchase price $55,000
Delivery charges 725
Installation fees 300
Salas tax 3,400
What is the depreciable basis of the equipment?
Allen owns 100 shares of Prime Corp., a publicly traded company, which Allen purchased on January 4, 2012, for $10,000. On January 3, 2013, Prime declared 2- for-I stock split when the fair market value (FMV) of the stock was $120 per share. Immediately following the split, the FMV of Prime stock was $62 per share. On February 1, 2014, Allen has his broker specifically sell the 100 shares of Prime stock received in the split When the FMV of the stock was $65 per share. What amount should Allen recognize as long-term capital gain on his Form 1040, US Individual Income Tax Return, for 2014?
Four years ago, a self-employed taxpayer purchased office furniture for $30,000. During the current tax year, the taxpayer sold the furniture for $37,000. At the time of the sale, the taxpayer's depreciation deductions totaled $20,700. What part of the gain may be taxed as long-term capital gain?
On July I, 2013, Louis Herr exchanged an office building having a fair market value of $400,000, for cash of $30,000 plus an apartment building having fair market value of $320,000. Herr's adjusted basis for the office building was $250,000. How much gain should Herr recognize in his 2013 income tax return?
Bluff purchased equipment for business use for $35,000 and made $1,000 of improvements to the equipment. After deducting depreciation of $5,000, Bluff gave the equipment to Russett for business use. At the time the gift was made, the equipment had a fair market value of $32,000. Ignoring gift tax consequences, what is Russet's basis in the equipment?
A taxpayer sold for $200,000 equipment that had an adjusted basis of $180,000. Through the date of the sale, the taxpayer had deducted $30,000 of depreciation. Of this amount, $17,000 was in excess of straight-line depreciation. What amount of gain would be recaptured under Section 1245 (Gain from Dispositions of Certain Depreciable Property)?
Carter purchased 100 shares of stock for $50 per share. Carter died on February 1, 2011 and bequeathed the 100 shares of stock to a relative, Boone, when the stock had a market price of $100 per share. On April 1, 2013, the stock split 2-for-I. Scone gave 100 shares of the stock to another of Carter's relatives, Dixon, on June 1, 2013, when the market value of the stock was $150 per share. What was Dixon's basis in the 100 shares of stock when acquired on June I?
Sheri received jewelry as a gift from her aunt, Amy. At the time of the gift, the jewelry had a fair market value of $54,000 and an adjusted basis of $19,000. This was the only gift that Sheri received from Amy during 2013. If Amy paid a gift tax of $8,000 on the transfer of the gift to Sheri, what tax basis will Sheri have for the jewelry?
Danielson invested $2,000,000 in DEC, a qualified small business corporation. Six years later, Danielson sold all of the DEC stock for $16,000,000 and purchased an office building with the proceeds. Danielson had not previously excluded any gain on the sale of small business stock. What is Danielson's taxable gain after the exclusion if he sold the stock in 2013?
In 2013, Joan sold 1,000 shares of Cornell Co. stock to her sister, Susan, for the stock's fair market value of $30,000. Joan had paid $36,000 for the stock in 2010. Subsequently in 2013, Susan sold the stock to an unrelated third party for $41,000. What amount of gain from the sale of the stock to the third party will be taxed to Susan on her 2013 income tax return?
Carl Slater was the sole proprietor of a high-volume drug store which he owned for 25 years before he sold it to Statewide Drug Stores, Inc. in 2013. Besides the $800,000 selling price for the store's tangible assets and goodwill, Slater received a lump sum of $60,000 in 2013 for his agreement not to operate a competing enterprise within 10 miles of the store's location, for a period of 5 years. How will the $60,000 be taxed to Slater?
As $60,000 ordinaryincome in 2013.
For a married couple filing joint return, the excess of net long-term capital loss over net short-term capital gain is
Limited to a maximum deduction of $3,000 from ordinary income.
Which of the following is capital asset?
Land held as an investment.
Farr made a gift of stock to her child, Pat. At the date of the gift, Farr's stock basis was $10,000 and the stock's fair market value was $15,000. No gift taxes were paid. What is Pat's basis in the stock for computing gain?
Which one of the following would not be Sec. 1231 property even though held for more than 12 months?
a. Depreciable equipment used in business.
b. Unharwested crops on land used in business.
c. Copyrights, literary, musical, or artistic compositions held by taxpayer whose personal efforts created such property.
d. Unimproved land used for business.
Copyrights, literary, musical, or artistic compositions held by taxpayer whose personal efforts created such property.
Winkler, a CPA, provided accounting services to a client, Thompson. On December 15 of the same year, Thompson gave Winkler 100 shares of Foster Corp. as compensation for services. The client's adjusted basis of the stock was $4,000, and its fair market value at the time of transfer was $5,000. Two months later, Winkler sold the stock on February 15 for $7,500. What is the amount Winkler should recognize as gain on the sale of the stock?
Wynn, a single individual age 50, sold Wynn's personal residence for $450,000. Wynn had owned Wynn's residence, which had a basis of $250,000, for six years. Within eight months of the sale, Wynn purchased a new residence for $400,000. What is Wynn's recognized gain from the sale of Wynn's personal residence?
David Bass died on November 1, 2012, bequeathing his entire estate to his brother, Jason. The alternate valuation date was validly elected by the executor of David's estate. David's estate included 5,000 shares of listed stock for which David's basis was $515,000. This stock was distributed to Jason 9 months after David's death. Fair market values of this stock were
At the date of David's death $600,000
6 months after David's death 670,000
9 months after David's death 690,000
Jason's basis for this stock is
David Price owned machinery which he had acquired in 2012 at a cost of $100,000. During 2014, the machinery was destroyed by fire. At that time it had an adjusted basis of $86,000. The insurance proceeds awarded to Price amounted to $125,000, and he immediately acquired a similar machine for $110,000. What should Price report as ordinary income resulting from the involuntary conversion for 2014?
Which of the following items is capital asset?
a. Accounts receivable for inventory sold.
b. Real property used in a trade or business.
c. An automobile for personal use.
d. Depreciable business property.
An automobile for personal use.
In 2012, Martha received as a gift several shares of Good Corporation stock. The donor's basis of this stock was $2,300. On the date of the gift, the fair market value of the stock was $2,600. If Martha sells this stock in 2014 for $2,700, what amount and type of gain or loss should Martha report in her 2014 income tax return?
No gain or loss.
Matt Hewlett bought a plot of land with a cash payment of $60,000 and purchase money mortgage of $45,000. In addition, Hewlett paid $150 for title insurance policy. Hewlett's basis for this land is
On May 31, 2013, Day Corporation sold machinery for $41,000. The machinery which had been purchased on January 2, 2011, for $40,000 had an adjusted basis of $21,000 on the date of sale. For 2013 Day should report
Section 1231 gain of $1,000 and ordinary income of $19,000.
The following information pertains to the sale of John and Karen Yale's principal residence:
Date of sale July 2013
Date of purchase June 1997
Net sales price $890,000
Adjusted basis $225,000
John and Karen owned their home jointly and had occupied it as their principal residence since acquiring the home in 1997. In August 2013, the Yales bought a condo for $275,000 to be used as their principal residence. What amount of gain must the Yales recognize on their 2013 joint return from the sale of their residence?
On January 10, 2012, Martin Mayne bought 3,000 shares of Hance Corporation stock for $300,000. The fair market values of this stock on the following dates were as follows:
Dec. 31, 2013 $210,000
Mar. 31, 2014 240,000
June 30, 2014 270,000
Martin died on December 31, 2013, bequeathing this stock to his son, Philip. The alternate valuation was elected for Martin's estate. The stock was distributed to Philip on March 31, 2014. Philip's basis for this stock is
Sands purchased 100 shares of Eastern Corp. stock for $18,000 on April 1 of the prior year. On February I of the current year, Sands sold 50 shares of Eastern for $7,000. Fifteen days later, Sands purchased 25 shares of Eastern for $3,750. What is the amount of Sands' recognized gain or loss?
During the current year, Al Oran bought a paved vacant lot adjacent to his retail store for use as a customers' parking lot at cost of $15,000. In addition, Oran bought new store fixtures costing $3,000. What portion of these assets constitutes capital assets?