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In 2014, Kayanna and Damian sold a house to Guerol for $850,000. Prior the 2014 sale




10. In 2014, Kayanna and Damian sold a house to Guerol for $850,000. Prior the 2014 sale, neither Kayanna nor Damian had ever excluded a gain from the sale of a personal residence. Kayanna and;Damian had lived in the house for the last six years and used it exclusively for personal purposes. Kayanna and Damian had purchased the house for $100,000. Kayanna and Damian started living in the house immediately after purchasing it and never made any capital improvements to the house or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a gain did Kayanna and Damian realize on the sale to Guerol (assume that Kayanna and Damian are married and file a joint return)?;a. $0;b. $250,000;c. $500,000;d. $750,000 (850,000 ? 100,000);11. Assume the facts stated in the previous question. How much of a;gain must Kayanna and Damian recognize on the sale to Guerol?;a. $0;b. $250,000 (750,000 gain ? 500,000 homeowners exclusion);c. $500,000;d. $750,000;12. In 2014, Lemisse will have taxable income of approximately $60,000. In 2014, Lemisse will also have a long-term capital loss of $17,000. Lemisse has no other capital gains or losses (in 2014 or prior years). For 2014, what is the maximum capital loss amount that Lemisse may use to offset her other income?;a. $17,000;b. $14,000;c. $3,000 (capital loss deductions are limited to $3,000 a year);d. $0;13. Assume the facts stated in the prior question. Assume further that for 2014 Lemisse offset her wages (with her capital loss) to the maximum extent permitted by law. What is the amount of Lemisse?s capital loss carryover to 2015?;a. $17,000;b. $14,000 (17,000 total capital loss - 3,000 deduction in 2014);c. $3,000;d. $0;14. Monica is a single taxpayer in the 35% tax bracket. Monica wants to minimize her 2014 tax liability. Which of the following provides the LARGEST tax benefit to Monica (assume that she may legally take advantage of each item in its entirety for 2014)?;a. A $500 exclusion from gross income. (5,000 x 35% = 175 tax savings);b. A $5,000 deduction from gross income. (5,000 x 35% = 1,750 tax savings).;c. A $500 tax credit. (500 tax savings);d. Options ?a? and ?c? would provide the largest tax benefits.;15. What was the MAXIMUM EARNED INCOME CREDIT amount that;Gonzalo and Amy could possibly take for 2014? Assume they are;U.S. taxpayers filing a joint return with TWO qualifying children.;a. $6,000;b. $5,460;c. $2,000;d. $0;16. Which item MOST resembles an interest free loan from the U.S. government?;a. First-time homebuyer credit for a closing that occurred in June of 2008 (because this has to be repaid in $500 increments over 15 years);b. The American Opportunity tax credit;c. The earned income credit;d. The child tax credit;17. In early 2014, Ellice sold her personal residence to Sagi for $400,000. At the time of the sale, Ellice?s adjusted basis was $100,000. Within three months of the sale, Ellice moved into a new residence she purchased for $700,000. What is Ellice?s basis in her new residence?;a. $700,000 (the 700,000 purchase price is her basis);b. $600,000;c. $400,000;d. $300,000;18. Which of the following is TRUE?;a. When compared to deferrals, exclusions are more temporary in nature;b. Section 1031 provides for an elective deferral upon certain exchanges;c. When compared to exclusions, deferrals are more temporary in nature;d. All of the above;19. Anne-Emilie?s business property (located in Wesleyville USA) was condemned by the proper local authorities. Immediately before the condemnation, the property had a fair market value of $800,000 and Anne-Emilie?s adjusted basis in the property was $500,000. The local authorities replaced Anne Emilie?s condemned property with similar Wesleyville property having a fair market value of $700,000. What is Anne-Emilie?s realized gain or loss relating to these matters?;a. Gain of $700,000;b. Gain of $200,000 (700,000 property received less 500,000 adjusted basis);c. Loss of $100,000;d. $0;20. Assume the facts stated in the prior question. What is Anne-Emilie?s recognized gain or loss relating to such matters?;a. Gain of $700,000;b. Gain of $200,000;c. Loss of $100,000;d. $0 (gain is not reported when only similar property and no property is received in a condemnation/involuntary conversion);21. Assume the facts stated in the prior two questions. What is Anne-Emilie?s basis in the Wesleyville property she received as a result of the condemnation (i.e., what is Anne-Emilie?s basis in the newly acquired property)?;a. $800,000;b. $700,000;c. $500,000 (because she received only property, her basis in the new property is the same as her basis in the old property);d. $0


Paper#19405 | Written in 18-Jul-2015

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