45) Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?
B) $20,000
46) Will exchanges a building with a basis of $35,000, and subject to a liability of $30,000, for land with a FMV of $50,000 owned by Jane. Jane takes the land subject to the liability. The amount realized by Will is
D) $80,000.
47) Richard exchanges a building with a basis of $35,000, and subject to a liability of $25,000, for land with a FMV of $50,000 owned by Bill. Bill takes the building subject to the liability. What is the amount of Richard's realized gain?
D) $40,000
48) Jack exchanged land with an adjusted basis of $65,000 subject to a liability of $22,000 for $50,000 (FMV) of stock owned by Hayden. Hayden takes the land subject to the liability. Jack incurs $500 of selling expenses. What is the amount of Jack's real
C) $6,500 gain
49) Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. The adjusted basis in the home is
C) $180,000.
50) Which one of the following does not affect the adjusted basis of a house held as rental property?
C) painting of more than 50% of the rooms in the home
51) Jordan paid $30,000 for equipment two years ago and has claimed total depreciation deductions of $15,600 for the two years. The cost of repairs during the same time period was $2,000 while a major overhaul which extended the life of the equipment cost
C) $21,400
52) Allison buys equipment and pays cash of $50,000, signs a note of $10,000 and assumes a liability on the property for $3,000. Also, Allison pays an installation cost of $500 and a delivery cost of $800. Allison's basis in the asset is
D) $64,300.
53) Dennis purchased a machine for use in his business. Mr. Dennis' costs in connection with this purchase were as follows:
Note to seller $33,000
Cash paid to seller 5,000
State sales tax 2,400
Freight to place of business 1,500
Wages paid to workers to
D) $46,100
54) During the current year, Tony purchased new car wash equipment for use in his service station business. Tony's costs in connection with the new equipment this year were as follows:
Cost of the equipment $45,000
Sales tax on the equipment 4,000
Deliver
C) $52,600
55) Terra Corp. purchased a new enterprise software system and incurred the following costs:
Cost of the system $800,000
Installation of system 5,000
Testing of system 6,000
Initial training of employees 9,000
What is Terra Corp.'s basis in the software s
D) $820,000
56) Empire Corporation purchased an office building for $500,000 cash on April 1. Prior to renting it out to tenants on July 1, Empire spent $200,000 on materials and labor to renovate the property. It funded $50,000 of the renovation cost with its own fu
C) $702,000.
57) Edward purchased stock last year as follows:
Month Shares Total Cost
March 100 $ 270
July 200 600
October 600 $1,200
In April of this year, Edward sells 80 shares for $250. Edward cannot specifically identify the stock sold. The basis for the 80 share
C) $216.
58) Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $105,000 and an adjusted basis of $85,000 to Kathleen's grandfather. The grandfather did not have any gift taxes due. One year later, Kathleen sold t
D) $25,000
59) Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $85,000 and an adjusted basis of $110,000 to Kathleen's grandfather. One year later, Kathleen sold the land for $80,000. What was her gain or (loss)
B) ($5,000)
60) Dale gave property with a basis of $16,000 to Sarah when it had a FMV of $12,000. No gift taxes were due. Sarah later sold the property for $22,000 resulting in a recognized gain of
C) $6,000.
61) In the current year, Andrew received a gift of property from his uncle. At the time of the gift, the property had a FMV of $114,000 and an adjusted basis to his uncle of $70,000. After deducting the annual exclusion, the amount of the gift was $100,00
B) $80,560
62) During the current year, Don's aunt Natalie gave him a house. At the time of the gift, the house had a FMV of $144,000 and his aunt's adjusted basis was $133,000. After deducting the annual exclusion, the amount of the gift was $130,000. His aunt paid
C) $134,692
63) David gave property with a basis of $133,000 to Hannah when the property had a FMV of $100,000 and paid gift taxes of $8,000. If Hannah later sells the property for $140,000, Hannah's basis (to determine gain) in the property immediately before the sa
C) $133,000.
64) Joycelyn gave a diamond necklace to her granddaughter Emma. Joycelyn had purchased the necklace in 1980 for $15,000. The FMV of the necklace at the time of the gift was $44,000. After deducting the annual exclusion, the amount of the gift was $30,000.
B) $24,667
65) Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4 of the current year. His father paid $30 per share for the stock on September 2, 2005. The FMV of the stock on the date of death was $50 per share. On September
C) $ 15,000 LTCG
66) Melody inherited 1,000 shares of Corporation Zappa stock from her mother who died on March 4 of the current year. Her mother paid $30 per share for the stock on September 2, 2005. The FMV of the stock on the date of death was $65 per share. On Septemb
C) $ 70,000
67) Douglas and Julie are a married couple who live in Louisiana, a community property state. They jointly own property with an adjusted basis of $140,000. On December 2 of this year, Julie died when the property had a fair market value of $160,000. Dougl
D) $160,000.
68) Terrell and Michelle are married and living in New York, which is a not a community property state. They jointly own property with an adjusted basis of $240,000. On December 2 of this year, Michelle died when the property had a fair market value of $2
C) $250,000.
69) Billy and Sue are married and live in Texas, a community property state. They jointly own real property with an adjusted basis of $200,000. When the property has a FMV of $450,000, Billy dies leaving all of the property to Sue. If she later sells the
A) $200,000
70) DeMarcus and Brianna are married and live in a common law state. They jointly own real property with an adjusted basis of $200,000. When the property has a FMV of $450,000, DeMarcus dies leaving all of the property to Brianna. If she later sells the p
C) $325,000
71) In a community property state, jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to
B) the total fair market value of the entire property at the date of death (if the alternative valuation date was not elected).
72) In a common law state, jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to
D) half of the basis just before death, plus half of the fair market value at the date of death (the alternative valuation date was not elected).
73) Tina purchases a personal residence for $278,000, but subsequently converts the property to rental property when its FMV is $275,000. Assume depreciation of $65,000 has been deducted after conversion to rental use. If Tina sells the property for $200,
A) ($10,000) loss.
74) Josh purchases a personal residence for $278,000 but subsequently converts the property to rental property when its FMV is $275,000. Assume depreciation of $65,000 has been deducted after conversion to rental use. If Josh sells the property for $280,0
C) $67,000 gain.
75) Dustin purchased 50 shares of Short Corporation for $500. During the current year, Short declared a 10% stock dividend. What is the basis per share before and after the stock dividend is distributed?
A)
Before After
$10 $9.09
76) In 2011 Toni purchased 100 shares of common stock in Blue Corporation for $5,280. In 2012, Blue declared a stock dividend of one share of its common stock for each 10 shares held. This year, 2014, Blue's common stock split 2 for 1 at a time when the F
A) $24 per share
77) If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend, the original stock's basis is allocated to all shares
C) based on relative fair market values at the time of the stock dividend.
78) Bob owns 100 shares of ACT Corporation common stock with a basis of $3,500 and a FMV of $12,000. Bob receives 10 stock rights as a nontaxable distribution, and no basis is allocated to the stock rights. With each stock right, Bob may acquire one share
B) $ 250.
79) Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000. Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000. Jessica sold the stock rights for $4,000. Jessica's gain or loss on the
A) $1,000.
80) Brad owns 100 shares of AAA Corporation with a basis of $6,000 and a FMV of $24,000. Brad receives 15 stock rights as a nontaxable distribution with a total FMV of $6,000. Brad allows the stock rights to expire. Brad's loss recognized and the basis of
B) $0 and $6,000.
81) All of the following are capital assets with the exception of
C) equipment used in a trade or business.
82) Which one of the following is a capital asset?
B) automobile used for personal purposes
83) Mike, a dealer in securities and calendar-year taxpayer, purchased a security for inventory on November 18, 2013 for $15,000. The FMV on December 31, 2013 was $16,000. The security was sold on December 19, 2014 for $16,500. These transactions result i
D) $1,000 ordinary income in 2013; $500 ordinary income in 2014.
84) Kate subdivides land held as an investment and Section 1237 is satisfied. The lots sell for $30,000 per lot (basis $10,000). Kate sells five lots in the first year. Kate's ordinary income is
A) $0.
85) Coretta sold the following securities during 2014:
Date Acquired Date Sold Sales Price Basis
A 6-15-2010 3-30-2014 $ 6,500 $12,500
B 7-12-2014 10-1-2014 $ 2,000 $ 9,000
C 1-15-2014 6-21-2014 $14,000 $13,000
D 4-2-2011 12-29-2014 $36,000 $15,000
What i
B) $9,000 ANCG
86) Antonio is single and has taxable income of $150,000 without considering the sale of a capital asset (land held for investment) in September of 2014 for $25,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liabili
B) $3,000.
87) Sanjay is single and has taxable income of $13,000 without considering the sale of a capital asset in November of 2014 for $15,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capi
A) $0.
88) Sari is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2014 for $15,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capita
D) $915.
89) Renee is single and has taxable income of $480,000 without considering the sale of a capital asset (land held for investment) in September of 2014 for $25,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability
D) $4,000.
90) Nate sold two securities in 2014:
Purchased Sold Sales Price Basis
MASH 1-1-2010 5-10-2014 $12,000 $10,000
KMZ 12-2-2013 9-22-2014 $4,000 $5,000
Nate has a 25% marginal tax rate. What is the additional tax resulting from the above sales?
A) $150
91) Darla sold an antique clock in 2014 for $3,000. She had purchased the clock in 2009 for $2,000. If she is otherwise in the 35% marginal tax bracket, what is the maximum tax rate on the capital gain on the sale of the clock?
C) 28%
92) To be considered a Section 1202 gain, the stock being sold must meet all of the following characteristics except
D) at least 50% of the value of the corporation's assets must be used in the active conduct of one or more qualified trades or businesses.
93) The taxable portion of a gain from qualified small business stock is taxed at a top tax rate of
D) 28%.
94) Andrea died with an unused capital loss carryover of $3,300. The carryover
D) expires with death.
95) This year, Lauren sold several shares of stock held for investment. The following is a summary of her capital transactions for 2014:
Acquired Sold This Year Selling Price Cost
09/25/2014 12/15 $800 $1,000
02/15/2014 07/15 2,200 1,750
06/25/2010 08/01
C)
NLTG NSTG
$ 1,050 $250
96) 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
B) deduct losses of $3,000 against ordinary income and carry $3,200 of STCL forward.
97) 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
C) $3,000 of ordinary income and have a $2,200 STCL carryforward and $2,400 LTCL carryforward.
98) 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
B)
An offset against
ordinary income Loss carryforward
$ 3,000 $ 500
99) During the current year, Nancy had the following transactions:
Short-term capital loss ($1,800)
Short-term capital gain 3,600
Short-term capital loss carryover from last year ( 2,200)
Long-term capital gain 7,000
Long-term capital loss ( 15,000)
What
B)
Deduction Carryover
$3,000 $5,400 LTCL carryover
100) Kendrick, who has a 35% marginal tax rate, had the following results from transactions during the year:
Collectibles gain $20,000
Short-term capital loss 4,000
Long-term capital gain 8,000
After offsetting the STCL, what is (are) the resulting gain(s
A) $16,000 collectibles gain, $8,000 LTCG
101) 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?
B) $4,100
102) 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 c
D) $28,300
103) 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
B) $2,280.
104) 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
C) $760.
105) In the current year, ABC Corporation had the following items of income, expense, gains, and losses:
Sales $500,000
Cost of sales 270,000
Operating expenses 100,000
Interest on savings account 14,000
Gain on sale of AT&T stock 6,000
Loss on sale of IB
C) $144,000
106) Topaz Corporation had the following income and expenses during the current year:
Revenues $80,000
Expenses 30,000
Gains on sale of capital assets 5,000
Losses on sale of capital assets (25,000)
What is Topaz's taxable income?
B) $50,000
107) Everest Inc. is a corporation in the 35% marginal tax bracket. It sold two stockholdings this year, resulting in a long-term capital gain of $15,000 on stock A and a short-term capital loss of $5,000 on stock B. What is the extra tax that Everest wil
A) $3,500
108) On January 31 of this year, Jennifer pays $700 for an option to acquire 100 shares of Lifetime Corporation common stock for $70 per share. Jennifer exercises the option on June 2. Jennifer sells the stock on April 30 of next year for $10,000. Jennife
D) $7,700.
109) On January 31 of this year, Mallory pays $800 for an option to acquire 100 shares of Mesa Corporation common stock for $85 per share. As a result of an increase in the market value of the Mesa stock, the market price of the option increases and Mallo
A) $200 STCG.
110) On January 31 of the current year, Sophia pays $1,000 for an option to acquire 100 shares of Texas Corporation common stock for $105 per share at any time prior to December 31. As of December 31 Sophia had not exercised the option or sold it. Which o
A) Sophia may recognize a $1,000 STCL.
111) How long must a capital asset be held to qualify for long-term treatment?
C) one year and one day
112) On July 25, 2013, Marilyn gives stock with a FMV of $7,500 and a basis of $5,000 to her nephew Darryl. Marilyn had purchased the stock on March 18, 2013. Darryl sold the stock on April 18, 2014 for $7,800. As a result of the sale, what will Darryl re
D) $2,800 LTCG
113) On July 25, 2013, Karen gives stock with a FMV of $7,500 and a basis of $8,000 to her nephew Bill. Karen had purchased the stock on March 18, 2013. Bill sold the stock on April 18, 2014 for $6,000. As a result of the sale, what must Bill report on hi
A) ($1,500) STCL
114) Rita died on January 1, 2014 owning an asset with a FMV of $730,000 that she purchased in 2010 for $600,000. Bert inherited the asset from Rita. When Bert sells the asset for $800,000 on August 20 of this year, he must recognize a
B) LTCG of $70,000.
115) Margaret died on September 16, 2014, when she owned securities with a basis of $50,000 and a FMV of $60,000. Caroline inherited the property and sold it on December 19, 2014 for $67,000. What is Caroline's reported gain on this sale?
B) $7,000 LTCG
116) Rita, who has marginal tax rate of 39.6%, is planning to make a gift to her grandson who is in the lowest tax bracket. Which of the following holdings of stock would be the most tax advantageous gift from Rita's perspective?
A)
Stock FMV Adjusted Basis
A $25,000 $12,000
117) Arthur, age 99, holds some stock purchased many years ago for $10,000 which is now worth $100,000. He is trying to plan for the eventual disposition of this stock. Arthur's only remaining family member is his grandson. For income tax purposes, Arthur
C) leave the stock to his grandson as an inheritance.