Quiz 2 | Complete Solution

1. All of the following assets are capital assets except: apple stock, business inventory, personal furniture, or personal automobile.

2. Bob sells a land investment for 45,000 cash, and the purchaser assumes bobs 32,500 debt on the investment.. The basis of bob’s land investment is 55,000. What is the gain or loss realized on the sale?: 10,000 loss, 10,000 gain, 22,500 loss, or 22,500 gain

3. In 2014 the top tax rate are _ percent on individual long term capital gains on sale of stock, and _ percent on capital gains on sales of collectible items, assuming the ACA medicare surtax does not apply: 10;20, 25;28, 20;28, or 15;25.

4. In novemeber 2014, ben and betty (married filing jointly) have a long term capital gain of 50,000 on the sale of stock. They have no other capital gains and losses for this year. Their ordinary income for the year after the standard deduction is and personal exemption is 72,500. Making their total taxable income of the year 122,500. In 2014 married tax payers pay 10 percent on taxable income up to 18,150. 15 percent on the next 55,650 and 25 percent on the next 75,050 of taxable income. What will be their 2014 tax liability assuming a tax of 9,971 on the 72,500 of ordinary income?: 18,375,22,338,17,471, or 9,971.

5. Which of the following is section 1231 property: equipment used in a trade of business, personal automobile, inventory, or accounts receivable.

6. In 2014, mary sells for 15,000 a machine used for business. The property was purchased on may 1,2011 at a cost of 12,500. Mary has claimed depreciation on the machine of 4,750. What is the amount and nature of marys gains a result of the sale of the machine.?: 7,250 section 1231 gain, 7,250 ordinary income under section 1245, 2,500 ordinary income and 4,750 section 1231 gain, or 2,500 section 1231 gain and 4,750 ordinary income under section 1245.

7. During 2014 paul sells resedentional rental property for 300,000, which he aqquired in 1993 for 150,000. Paul has claimed straight line depreciation on the building of 57,525. What is the amount of nature of pauls gain on the sale of the rental property?: 190,125 section 1231 gain, 17,400 uncaptered depreciation, 207,525 section 1231 gain, 150,000 section 1231 gain, 57525 unrecaputed depreciation, or 167,400 section 1231 gain, 57,525 ordinary income

8. Pat sells real esate for 30,000 cash and a 120,000 5-year note. If her basis in the property is 90,000 and she receives only the 30,000 down payment in the year of the sale, how much is pats taxable gain in the year of the sale using the installment sales method: 12,000, 60,000, 30,000, or 15,000.

9. Fred and sarajane exchanged equipment in a qualifying like-kind exchange. . fred gives up equipment with an adjusted basis of 10,000(fair market value of 15,000.) in exchange for sarajanes equipment with a fair market value of 12,000 plus 3,000 cash. How much gain should fred recognize on the exchange: 1,000, 5,000, 3,000, or 0