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Exam 14: Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

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Question 61

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Samuel,head of household with two dependents,has 2015 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 2015 taxable income and the tax on the taxable income?

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Samuel has $15,750 taxable income and th...

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Question 62

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Martha is unmarried with one dependent and files as head of household.She had 2015 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?

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Martha has a tax of $3,693.Her tax on re...

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Question 63

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A business machine purchased April 10,2013,for $98,000 was fully depreciated in 2013 using § 179 immediate expensing.On August 15,2015,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

On January 18,2014,Martha purchased 200 shares of Blue Corporation stock for $2,000.On November 11,2015,she sold short 200 shares of Blue Corporation stock which she borrowed from her broker for $2,300.On February 10,2016,Martha closed the short sale by delivering the 200 shares of Blue Corporation stock which she had acquired in 2014.On that date,Blue Corporation stock had a market price of $4 per share.What is Martha's recognized gain or loss and its character in 2015? In 2016?

Sharon has the following results of netting her short-term and long-term capital gains and losses for 2015: $56,000 short-term capital loss,and $82,000 net long-term capital gain ($21,000 0%/15%/20% long-term capital gain,and $61,000 25% long-term capital gain). (a) ​ What is her net capital gain or loss for 2015? (b) ​ If there is a net capital loss,how much of the loss and what type of loss carries over to 2016? (c) If there is a net long-term capital gain,what is it made up of?

Willie is the owner of vacant land that he purchased in 2011 for $1,400,000 and held for investment.On January 22,2014,he was paid $145,000 for a thirteen-month option on the land by Susan.Susan could buy the land for an additional $1,200,000 by exercising the option.Susan had hoped to build a luxury home on the land,but was unable to get approval to build a big enough home to satisfy her needs.Consequently,Susan did not exercise her option and the option expired on February 22,2015.(1) What is Willie's basis,gain or loss,and type of gain or loss from these events? (2) What is Susan's basis,gain or loss,and type of gain or loss from these events?

Carol had the following transactions during 2015: a painting held for two years and sold at a gain of $85,000;100 shares of Gray stock held six months and sold for a loss of $6,000;50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Carol also had $264,000 of taxable income from other sources than these property transactions.What is Carol's net capital gain or loss and what is her taxable income?

The chart below describes the § 1231 assets sold by the Ecru Company (a sole proprietorship) this year.Compute the gain or loss from each asset disposition and determine the net § 1231 gain treated as long-term capital gain for the year.Assume there is a § 1231 lookback loss of $4,000. Asset Acquired Sold Cost Depreciation Sale Price Stamping machine 3/10/11 8/10/2015 $40,000 $29,736 $32,000 Factory building 2/12/08 7/23/2015 80,000 18,838 90,000 Tractor 5/16/10 11/13/2015 52,000 52,000 30,000 Overhead crane 11/12/04 2/25/2015 74,000 74,000 18,000

The chart below details Sheen's 2013,2014,and 2015 stock transactions.What is the capital loss carryover to 2015 and what is the net capital gain or loss for 2015? Tax Year Short-term Capital Gains Short-term Capital Losses Long-term Capital Gains Long-term Capital Losses 2013 $ 4,000 $ 6,000 $ 2,000 $13,000 2014 $16,000 $14,000 $23,000 $28,000 2015 $55,000 $52,000 $67,000 $33,000

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? Holding Period/Property Character of Gain or Loss Amount 5 years/vacant land § 1231 gain $7,000 2 years/business equipment § 1245 gain 3,200 3 years/publicly traded stock Long-term capital gain 890 8 months/publicly traded stock Short-term capital loss (1,870)

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 2011 for $8,200.Mike is single,has no dependents,and claims the standard deduction.What is his 2015 taxable income? (Ignore the self-employment tax deduction. )

A business taxpayer sold all the depreciable assets of the business,calculated the gains and losses,and would like to know the final character of those gains and losses.The taxpayer had $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $12,000.What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed? What is the taxpayer's adjusted gross income? (Ignore the self-employment tax deduction. ) Asset Purchase Date Sale Date Depreciation Gain (Loss) Machine #1 10/10/13 11/11/15 $323,000 $66,000 Machine #2 10/02/13 11/11/15 65,000 (15,000) Machine #3 09/23/11 11/11/15 183,000 23,000 Machine #4 09/23/11 11/11/15 28,000 64,000

Larry was the holder of a patent on a video game.During 2015,he sold all substantial rights in the patent for $365,000 in cash and a 3% royalty on the purchaser's first $10,200,000 of sales each year related to the product in which the patent is incorporated.Larry had not reduced the patent to practice.He had a $86,000 basis for the patent.During 2015,he received $30,000 in royalties.What is the nature and amount of Larry's gain?

Harold is a head of household,has $27,000 of taxable income in 2015 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) ​ What is Harold's taxable income and the tax on that taxable income?

Theresa and Oliver,married filing jointly,and both over 65 years of age,have no dependents.Their 2015 income tax facts are: Theresa's wages $165,000 Oliver's wages 33,000 Short-term capital gain 36,000 Long-term capital loss (41,000) What is their taxable income for 2015?

Phil's father died on January 10,2015.The father had owned stock for 20 years with a basis of $45,000 that was transferred to Phil as a gift on August 10,2014,when the stock was worth $430,000.His father paid gift tax of $31,000.This stock was worth $566,000 at the date of the father's death.Phil sold the stock for $545,000 net of commissions on February 23,2015.What is the amount and nature of Phil's gain or loss from disposition of this property?

On January 10,2015,Wally sold an option for $2,000 on vacant land he held as an investment.He had purchased the land in 2011 for $76,000.The option allowed the option holder to purchase the property for $122,000 plus the cost of the option.On March 1,2015,the option holder exercised the option.What is the amount and nature of Wally's gain or loss from disposition of the land?

Vanna owned an office building that had been held more than one year when it was sold for $567,000.The real estate had an adjusted basis of $45,000 for the land and $233,000 for the building.Straight-line depreciation of $162,000 had been taken on the building.What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?

The chart below describes the § 1231 assets sold by the Tan Company (a sole proprietorship) this year.Compute the gain or loss from each asset disposition and determine the net § 1231 gain treated as long-term capital gain for the year.Assume there is a § 1231 lookback loss of $14,000. Asset Acquired Sold Cost Depreciation Sale Price Stamping machine 3/10/11 8/10/2015 $40,000 $29,736 $ 2,000 Factory building 2/12/08 7/23/2015 80,000 18,838 90,000 Tractor 5/16/10 11/13/2015 52,000 52,000 60,000 Overhead crane 11/12/04 2/25/2015 74,000 74,000 18,000

A business taxpayer sold all the depreciable assets of the business,calculated the gains and losses,and would like to know the final character of those gains and losses.The taxpayer had $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $22,000.What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed? What is the taxpayer's adjusted gross income? (Ignore the self-employment tax deduction. ) Asset Purchase Date Sale Date Depreciation Gain (Loss) Machine #1 10/10/13 11/11/15 $323,000 $66,000 Machine #2 10/02/12 11/11/15 65,000 (15,000) Machine #3 09/23/11 11/11/15 183,000 23,000 Machine #4 09/23/11 11/11/15 28,000 34,000