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




Question;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#52077 | Written in 18-Jul-2015

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