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Exam 16: Property Transactions Capital Gains and Losses

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Question 31

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In 2016,an individual taxpayer has $863,000 of taxable income that includes $48,000 of 0%/15%/20% long-term capital gain.Which of the following statements is correct?

A) All of the LTCG will be taxed at 0%.
B) All of the LTCG will be taxed at 15%.
C) All of the LTCG will be taxed at 20%.
D) Some of the LTCG will be taxed at 15% and some at 20%.
E) None of the above.

F) All of the above
G) A) and E)

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Question 32

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In 2016,Mark has $18,000 short-term capital loss,$7,000 28% gain,and $6,000 0%/15%/20% gain.Which of the statements below is correct?

A) Mark has a $5,000 capital loss deduction.
B) Mark has a $3,000 capital loss deduction.
C) Mark has a $13,000 net capital gain.
D) Mark has a $5,000 net capital gain.
E) Mark has a $18,000 net capital loss.

F) C) and D)
G) A) and E)

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Question 33

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Sara is filing as head of household and has 2016 taxable income of $57,000 which includes $3,000 of net long-tem capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.

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?

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: 28% long-term capital gain $ 4,300 28% long-term capital loss (2,000) 0%/15%/20% long-term capital gain 19,000 Short-term capital loss (1,700) ​ Ignore standard deductions and exemptions.What is Harold's taxable income and the tax on that taxable income?

When a patent is transferred,the most common forms of payment received by the transferor are a lump sum and/or periodic payment.

Hilda lent $2,000 to a close personal friend to help the friend avoid overdrawing the friend's checking account.The friend was supposed to repay the $2,000 within a month.Instead,the friend declared personal bankruptcy and Hilda will never recover any of the $2,000.What are the tax implications of these events for Hilda?

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.

Hiram is a computer engineer and,while unemployed,invents a switching device for computer networks.He patents the device,but does not reduce it to practice.Hiram has a zero tax basis for the patent.In consideration of $800,000 plus a $1 royalty per device sold,Hiram assigns the patent to a computer manufacturing company.Hiram assigned all substantial rights in the patent.Which of the following is correct?

The possible holding periods for capital assets include:

A franchisor licenses its mode of business operation to a franchisee.

The only things that the grantee of an option may do with the option are exercise it or let it expire.

Ryan has the following capital gains and losses for 2016: $6,000 STCL,$5,000 28% gain,$2,000 25% gain,and $6,000 0%/15%/20% gain.Which of the following is correct:

If the holder of an option fails to exercise the option,the lapse of the option is considered a sale or exchange on the option expiration date.

Samuel,head of household with two dependents,has 2016 wages of $26,000,paid alimony of $3,000,has taxable interest income of $2,000,and a $12,000 0%/15%/20% net long-term capital gain.Samuel uses the standard deduction and is age 38.What is his 2016 taxable income and the tax on the taxable income?

Mike is a self-employed TV technician.He is usually paid as soon as he completes repairs,but occasionally bills a customer with payment expected within 30 days.At the end of the year he has $2,500 of receivables outstanding.He expects to collect $1,200 of this and write off the remainder.Mike is a cash basis taxpayer and had net earnings from his business (not including the effect of the items above)of $55,000.He also had $3,500 interest income,$200 gambling winnings,and sold corporate stock for $7,000.The stock had been purchased in 2012 for $8,200.Mike is single,has no dependents,and claims the standard deduction.What is his 2016 taxable income? (Ignore the self-employment tax deduction. )

An individual taxpayer received a valuable painting from his uncle,a famous painter.The painter created the painting.After the taxpayer held the painting for two years,he sold it for a $400,000 gain.The gain is a long-term capital gain.

Which of the following is correct concerning short sales of stock?

Martha is unmarried with one dependent and files as head of household.She had 2016 taxable income of $45,000 which included $16,000 of 0%/15%/20% net long-term capital gain.What is her tax on taxable income using the alternative tax on net long-term capital gain method?

In 2016,Satesh has $5,000 short-term capital loss,$13,000 0%/15%/20% long-term capital gain,and $7,000 qualified dividend income.Satesh is single and has other taxable income of $15,000.Which of the following statements is correct?