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In 2014, Mary and Tim sold a house to Zoff for $650,000. Mary and Tim




Question;22. In 2014, Mary and Tim sold a house to Zoff for $650,000. Mary and Tim had purchased the house for $900,000 in 2005 (during the real estate boom). Mary and Tim started living in the house immediately after purchasing it and never made any capital improvements to it or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a loss may Mary and Tim recognize on the sale to Zoff (assume that Mary and Tim are married and file a joint return and itemize deductions)?a. $0b. $249,900 less 10% of their AGIc. $250,000 less 10% of their AGId. $250,00023. Riphard purchased land for $50,000 in 1985. The land was valued at $1,050,000 on July 1, 2014, when Riphard died. Riphard?s son Joseinherited the land. What basis would Jose have in the land as a result of the inheritance?a. $0b. $50,000c. Riphard?s adjusted basis on July 1, 2014 (if different than $50,000)d. $1,050,00024. Assume the same facts stated in the previous question. Which of the following is most likely TRUE, if Jose sold the land in September 2014 for $1,200,000?a. In 2014, Jose should ?recapture? any depreciation previously taken by Riphard on the landb. In 2014, Jose will be taxed on the appreciation that occurred whileRiphard held the land (provided that such appreciation was previously not taxed)c. Jose?s 2014 gain is short-termd. Jose?s 2014 gain is long-term25. Which of the following statements is most likely TRUE for Jamison(a typical individual taxpayer in the 35% tax bracket)?a. Jamison usually prefers ordinary income to long-term capital gainsb. Jamison usually prefers capital losses to ordinary lossesc. Jamison usually prefers a $500 credit to a $1,000 deductiond. Both ?a? and ?b? are correct26. Pablo, who owns and operates an ice cream ship as a sole proprietor, has the following property:? Stocks held for Pablo?s investment? Elaborate ice cream making EQUIPMENT that was inherited fromCrucilena (Pablo?s grandmother) (it is used exclusively in the icecream shop)? Chairs that are used exclusively in the ice cream shop? a Computer used exclusively in the ice cream shopConsidering the above items, which option below lists the capital asset(s) under Section 1221?a. Only the stocksb. Only the stocks & chairsc. Only the equipment, chairs & computerd. Each of the above assets is a capital asset under Section 122127. Iris recently purchased a piece of land, a building and a truckfor a lump sum of $500,000. The fair market value of the land was$250,000, the fair market value of the building was $300,000, and the fair market value of the truck was $50,000. What is Iris?s basis in theland?a. $250,000b. $208,333c. $166,667d. $028. On September 1, 2001, Timothy paid $660 for 100 shares ofTXX-5761 Inc. common stock. On August 13, 2014, Timothy received a nontaxable 10% common stock dividend (i.e., 10 additional shares of identical common stock). On August 13, 2014, TXX-5761 Inc. thecommon stock was trading on the market for $100 a share. OnOctober 15, 2014, Timothy sold the 10 shares he received on August 13, 2014 to Kevin. What is the basis of the 10 shares Timothy sold to Kevin?a. $1,000b. $66c. $60d. $029. Refer to the facts stated in the prior question. The gain or loss resulting from the October 15, 2014 sale to Kevin will most likely be:a. Long-termb. Short-termc. Both short-term and long-termd. Neither short-term nor long-term30. In 2014, Catherine sold a piece of equipment from Catherine?s business for $200,000. The equipment was purchased in 2010 for $120,000. Assume total of $84,000 depreciation was taken (prior to the sale). What is Catherine?s recognized gain on the sale?a. $80,000b. $84,000c. $164,000d. $200,00031. Refer to the facts stated in the prior question. What amount of the gain (at least) will be recaptured at Catherine?s ordinary income rate?a. $80,000b. $84,000c. $164,000d. $200,00032. Refer to the facts stated in the prior two questions. What amount of the gain will be treated as Section 1231 gain and (possibly) taxed at the long-term capital gain rate?a. $80,000b. $84,000c. $164,000d. $200,000


Paper#52075 | Written in 18-Jul-2015

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