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Federal Taxation

Business

Quiz 21 :

Property Transactions: Capital Gains and Losses

Quiz 21 :

Property Transactions: Capital Gains and Losses

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Gains and losses are recognized when property is disposed of by gift or bequest.
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True False
Answer:

Answer:

False

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If Houston Printing Co.purchases a new printing press during the current year for $30,000,pays sales taxes of $2,000,and pays $1,000 for installation,the cost basis for the printing press is $33,000.
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True False
Answer:

Answer:

True

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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
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Multiple Choice
Answer:

Answer:

D

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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?
Multiple Choice
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Rick sells stock of Ty Corporation,which has an adjusted basis of $20,000,for $22,000.He pays a sales commission of $500.In computing his gain or loss,the amount realized by Rick is $1,500.
True False
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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 $7,000.What is Jordan's adjusted basis in the equipment at the end of the two-year period?
Multiple Choice
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Expenditures which do not add to the value or prolong the life of property may be expensed in the year in which they are incurred.
True False
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Losses are generally deductible if incurred in carrying on a trade or business or incurred in an activity engaged in for profit.
True False
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Capital recoveries increase the adjusted basis of an asset.
True False
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A taxpayer sells an asset with a basis of $25,000 to an unrelated party for $28,000.The taxpayer has a realized gain of $3,000.
True False
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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?
Multiple Choice
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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 realized gain on the exchange?
Multiple Choice
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Courtney sells a cottage at the lake that the family had used for their summer vacations.The purchaser paid Courtney $100,000 and assumed the mortgage which had a principal balance of $50,000.Courtney had purchased the cottage five years ago for $170,000.Courtney will recognize
Multiple Choice
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A taxpayer purchased an asset for $50,000 several years ago.He is now planning to sell it.Under the recovery of basis doctrine the taxpayer will not recognize any gain or pay any related taxes unless he sells the asset for more than $50,000.
True False
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On January 1 of this year,Brad purchased 100 shares of stock at $4,000.By December 31 of this year,the stock had declined in value to $2,200,but Brad still held the shares.Brad has realized a $1,800 loss for tax purposes this year.
True False
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Five different capital gain tax rates could apply to long-term capital assets sold by noncorporate taxpayers.
True False
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Which one of the following does not affect the adjusted basis of a house held as rental property?
Multiple Choice
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All realized gains and losses are recognized for tax purposes.
True False
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All recognized gains and losses must eventually be classified either as capital or ordinary.
True False
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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
Multiple Choice
Answer:
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