Question 1

The possible holding periods for capital assets include:

Accepted Answer

A)  Short-term = held 14 months or less.
B)  Long-term = greater than six months.
C)  Long-term = greater than 12 months.
D)  Short-term = greater than 12 months.
E)  None of the above.F) B) and D)
G) A) and C)

Question 2

A barn held more than one year and used in a business is destroyed in a tornado. The barn originally cost $356,000 and was fully depreciated using straight-line depreciation. The barn was insured for its $543,000 replacement cost minus a deductible of $1,000. Which of the statements below is correct concerning these facts?

Accepted Answer

A)   The barn was a long-term personal use asset.
B)   There is a casualty loss from disposition of the barn.
C)   The recognized gain from disposition of the barn is $186,000.
D)   The recognized gain from disposition of the barn is subject to special netting rules.
E)   c. and d.F) C) and D)
G) B) and C)

Question 3

Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line)  of $65,000. If Lynne sold the property, she would have a $53,000 gain. The initial characterization of the gain would be:

Accepted Answer

A)  Section 1245 gain.
B)  Section 1231 gain.
C)  Section 1250 gain.
D)  Section 1239 gain.
E)  None of the above.F) B) and E)
G) C) and D)

Question 4

Vertical, Inc., has a 2016 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2015. For 2016, Vertical's net § 1231 gain is treated as:

Accepted Answer

A)  $45,000 long-term capital gain and $22,000 ordinary loss.
B)  $67,000 ordinary gain.
C)  $45,000 long-term capital gain and $22,000 ordinary gain.
D)  $67,000 capital gain.
E)  None of the above.F) A) and B)
G) B) and C)

Question 5

Verway, Inc., has a 2016 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2015. For 2016, Verway's net § 1231 gain is treated as:

Accepted Answer

A)  $55,000 ordinary loss.
B)  $55,000 ordinary gain.
C)  $55,000 capital loss.
D)  $55,000 capital gain.
E)  None of the above.F) A) and E)
G) B) and D)

Question 6

Rental use depreciable machinery held more than 12 months is an example of a § 1231 asset.

Accepted Answer

A) True 
 B)False

Question 7

Section 1231 lookback losses may convert some or all of § 1245 gain into ordinary income.

Accepted Answer

A) True 
 B)False

Question 8

Business equipment is purchased on March 10, 2015, used in the business until September 29, 2015, and sold at a $23,000 loss on October 10, 2015. The equipment was not suitable for the work the business had purchased it for. The loss on the disposition should have been reported in the 2015 Form 4797, Part:

Accepted Answer

A)  I.
B)  II.
C)  III.
D)  IV.
E)  This transaction would not be reported in the Form 4797.F) A) and D)
G) A) and B)

Question 9

An individual taxpayer has the gains and losses shown below. There are $3,000 of § 1231 lookback losses. What is the net long-term capital gain?

Accepted Answer

The taxpayer has a net long-term capital...

Question 10

Section 1250 depreciation recapture will apply when accelerated depreciation was used on property used outside the United States and the property is sold at a gain.

Accepted Answer

A) True 
 B)False

Question 11

Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

Accepted Answer

A)   The securities he buys and sells each day in the normal course of his business.
B)   The securities he designates as held for investment at the end of the day of acquisition.
C)   The securities he holds more than 12 months.
D)   All the securities he owns.
E)   b., c., and d.F) All of the above
G) B) and C)

Question 12

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses.

Accepted Answer

A) True 
 B)False

Question 13

On June 10, 2016, Ebon, Inc. acquired an office building as a result of a like-kind exchange. Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange. Which of the statements below is correct?

Accepted Answer

A)  The holding period of the factory building includes the holding period of the office building.
B)  The holding period of the office building starts on June 11, 2016.
C)  The holding period of the office building starts on June 10, 2016.
D)  The holding period of the office building includes the holding period of the factory building.
E)  None of the above.F) All of the above
G) B) and D)

Question 14

Theresa and Oliver, married filing jointly, and both over 65 years of age, have no dependents. Their 2016 income tax facts are:
What is their taxable income for 2016?

Accepted Answer

The couple's taxable income is...

Question 15

The Code contains two major depreciation recapture provisions: § 1245 and § 1250.

Accepted Answer

A) True 
 B)False

Question 16

Lease cancellation payments received by a lessor are always ordinary income because they are considered to be in lieu of rental payments.

Accepted Answer

A) True 
 B)False

Question 17

Harold is a head of household, has $27,000 of taxable income in 2016 from non-capital gain or loss sources, and has the following capital gains and losses:
​
  
Ignore standard deductions and exemptions. What is Harold's taxable income and the tax on that taxable income?

Accepted Answer

Harold has taxable income of $...

Question 18

Which of the following comparisons is correct?

Accepted Answer

A)  Corporations may carryback capital losses; individuals may not.
B)  Both corporation and individual long-term capital losses carryover as short-term capital losses.
C)  Corporations may carryforward capital losses indefinitely; individuals may only carryforward capital losses for five years.
D)  Both corporations and individuals may use an alternative tax rate on net capital gains.
E)  None of the above.F) A) and C)
G) All of the above

Question 19

Lana purchased for $1,410 a $2,000 bond when it was issued two years ago. Lana amortized $200 of the original issue discount and then sold the bond for $1,800. Which of the following statements is correct?

Accepted Answer

A)  Lana has $10 of long-term capital loss.
B)  Lana has $190 of long-term capital gain.
C)  Lana has no capital gain or loss.
D)  Lana has $190 of long-term capital loss.
E)  None of the above.F) All of the above
G) D) and E)

Question 20

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

Accepted Answer

A) True 
 B)False

Exam 8: Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Section 1231 lookback losses may convert some or all of § 1245 gain into ordinary income.

Correct Answer
verified

Harold is a head of household, has $27,000 of taxable income in 2016 from non-capital gain or loss sources, and has the following capital gains and losses: Ignore standard deductions and exemptions. What is Harold's taxable income and the tax on that taxable income?

Correct Answer
verified
Harold has taxable income of $...
View Answer

Correct Answer
verified

Lana purchased for $1,410 a $2,000 bond when it was issued two years ago. Lana amortized $200 of the original issue discount and then sold the bond for $1,800. Which of the following statements is correct?

Correct Answer
verified

Vertical, Inc., has a 2016 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2015. For 2016, Vertical's net § 1231 gain is treated as:

Correct Answer
verified

Which of the following comparisons is correct?

Correct Answer
verified

Correct Answer
verified

Lease cancellation payments received by a lessor are always ordinary income because they are considered to be in lieu of rental payments.

Correct Answer
verified

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses.

Correct Answer
verified

Section 1250 depreciation recapture will apply when accelerated depreciation was used on property used outside the United States and the property is sold at a gain.

Correct Answer
verified

The possible holding periods for capital assets include:

Correct Answer
verified

The Code contains two major depreciation recapture provisions: § 1245 and § 1250.

Correct Answer
verified

Verway, Inc., has a 2016 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2015. For 2016, Verway's net § 1231 gain is treated as:

Correct Answer
verified

On June 10, 2016, Ebon, Inc. acquired an office building as a result of a like-kind exchange. Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange. Which of the statements below is correct?

Correct Answer
verified

An individual taxpayer has the gains and losses shown below. There are $3,000 of § 1231 lookback losses. What is the net long-term capital gain?

Correct Answer
verified
The taxpayer has a net long-term capital...
View Answer

Theresa and Oliver, married filing jointly, and both over 65 years of age, have no dependents. Their 2016 income tax facts are: What is their taxable income for 2016?

Correct Answer
verified
The couple's taxable income is...
View Answer

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

Correct Answer
verified

Rental use depreciable machinery held more than 12 months is an example of a § 1231 asset.

Correct Answer
verified

Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line) of $65,000. If Lynne sold the property, she would have a $53,000 gain. The initial characterization of the gain would be:

Correct Answer
verified

Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

Correct Answer
verified

Exam 8: Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Section 1231 lookback losses may convert some or all of § 1245 gain into ordinary income.

Correct AnswerverifiedShow Answer

Harold is a head of household, has $27,000 of taxable income in 2016 from non-capital gain or loss sources, and has the following capital gains and losses: ​ Ignore standard deductions and exemptions. What is Harold's taxable income and the tax on that taxable income?

Correct AnswerverifiedHarold has taxable income of $...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Lana purchased for $1,410 a $2,000 bond when it was issued two years ago. Lana amortized $200 of the original issue discount and then sold the bond for $1,800. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Vertical, Inc., has a 2016 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2015. For 2016, Vertical's net § 1231 gain is treated as:

Correct AnswerverifiedShow Answer

Which of the following comparisons is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Lease cancellation payments received by a lessor are always ordinary income because they are considered to be in lieu of rental payments.

Correct AnswerverifiedShow Answer

The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses.

Correct AnswerverifiedShow Answer

Section 1250 depreciation recapture will apply when accelerated depreciation was used on property used outside the United States and the property is sold at a gain.

Correct AnswerverifiedShow Answer

The possible holding periods for capital assets include:

Correct AnswerverifiedShow Answer

The Code contains two major depreciation recapture provisions: § 1245 and § 1250.

Correct AnswerverifiedShow Answer

Verway, Inc., has a 2016 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2015. For 2016, Verway's net § 1231 gain is treated as:

Correct AnswerverifiedShow Answer

On June 10, 2016, Ebon, Inc. acquired an office building as a result of a like-kind exchange. Ebon had given up a factory building that it had owned for 26 months as part of the like-kind exchange. Which of the statements below is correct?

Correct AnswerverifiedShow Answer

An individual taxpayer has the gains and losses shown below. There are $3,000 of § 1231 lookback losses. What is the net long-term capital gain?

Correct AnswerverifiedThe taxpayer has a net long-term capital...View AnswerShow Answer

Theresa and Oliver, married filing jointly, and both over 65 years of age, have no dependents. Their 2016 income tax facts are: What is their taxable income for 2016?

Correct AnswerverifiedThe couple's taxable income is...View AnswerShow Answer

Casualty gains and losses from nonpersonal use assets are not netted against casualty gains and losses from personal use assets.

Correct AnswerverifiedShow Answer

Rental use depreciable machinery held more than 12 months is an example of a § 1231 asset.

Correct AnswerverifiedShow Answer

Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line) of $65,000. If Lynne sold the property, she would have a $53,000 gain. The initial characterization of the gain would be:

Correct AnswerverifiedShow Answer

Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Harold is a head of household, has $27,000 of taxable income in 2016 from non-capital gain or loss sources, and has the following capital gains and losses: Ignore standard deductions and exemptions. What is Harold's taxable income and the tax on that taxable income?

Correct Answer
verified
Harold has taxable income of $...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The taxpayer has a net long-term capital...
View Answer

Correct Answer
verified
The couple's taxable income is...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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