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1. Which of the statements below is correct concerning capital losses of an individual taxpayer? (a) A 2023 net capital loss is deductible only up

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1. Which of the statements below is correct concerning capital losses of an individual taxpayer? (a) A 2023 net capital loss is deductible only up to $3,000 per year. (b) Excess net capital loss carries back and may be deducted in a prior year. (c) A net capital loss may exist when capital gains exceed capital losses. (d) Capital gains and losses need not be matched with one another. 2. James is a dealer in securities. He would like to acquire and hold stock as a capital asset, then sell it to get a capital gain or loss. Which of the statements below is correct? (a) Since he is a dealer, he cannot hold stock as a capital asset. (b) Losses are capital losses if at any time the stock has been clearly identified by James as held for investment. (c) If James clearly identifies the stock as held for investment by the close of business on the acquisition date, gain from the stock's sale will be capital gain. (d) Both (b) and (c). 3. Which of the following is a capital asset? (a) The bicycle of a ten year old child. The child purchased the bicycle with money inherited from an aunt. (b) The tools used by a self employed carpenter. (c) The lots owned by a company that is in the business of buying and reselling residential building lots. (d) A "mint" set of 1985 coins owned by a coin dealer and that is for sale on his website. 4. A worthless security had a holding period of 11 months when it became worthless on November 10,2023 . The investor who had owned the security had a basis of $10,000 for it. Which of the following statements is correct? (a) The investor has a long term capital loss of $10,000. (b) The investor has a short term capital loss of $10,000. (c) The investor has a nondeductible loss of $10,000. (d) The investor has a long term capital gain of $10,000. 5. On July 1,2023 , Brandon purchased an option to buy 1.000 shares of General, Inc. at $30 per share. He purchased the option for $2,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brandon decided to let the option lapse as of December 1, 2023. On his 2023 tax return, what should Brandon report? (a) A $2,000 long term capital loss. (b) A $2,000 short term capital loss. (c) A $2,000 Section 1231 loss. (d) A $2,000 ordinary loss. 6. Anwar is a cash basis landlord whose property was condemned because it had numerous housing code violations. The tenant had threatened to sue Anwar because the tenant had to move out. Anwar paid the tenant $3,000 in settlement of all claims. Which of the following statements is correct? (a) The landlord cannot deduct the $3,000. (b) The tenant must capitalize the $3,000. (c) The landlord can deduct the $3,000. (d) The tenant does not have to include the $3,000 in its gross income. 7. A like kind exchange of a Section 1231 asset has occurred. (a) The holding period of property received in the exchange includes six months of the holding period of the property given up. (b) The holding period of property received in the exchange includes the holding period of the property given up. (c) The holding period of property received in the exchange does not include the holding period of the property given up. (d) The holding period of property received in the exchange includes twelve months of the holding period of the property given up. 8. Which of the following is correct concerning short sales of stock? (a) At the time the short sale is made, the taxpayer always already owns the shares sold short. (b) At the time the short sale is made, the taxpayer delivers to the purchaser the shares sold short. (c) At the time the short sale is made, the taxpayer does not already own the shares sold short. (d) At the time the short sale is made, the taxpayer does not deliver to the purchaser the shares sold short. 9. Ryan has the following capital gains and losses for 2023: $3,000STCL (short term capital loss), $3,00028% gain, $2,00025% gain, and $6,000 5%115% gain. Which of the following is correct? (a) The net capital gain is composed of $1,00025% gain and $7,000 5%/15% gain. (b) The net capital gain is composed of $2,00028% gain and $6,000 5%/15% gain. (c) The net capital gain is composed of $3,00028% gain, $2,00025% gain, and $3,0005%/15% gain. (d) The net capital gain is composed of $2,00025% gain and $6,000 5%/15% gain. 10. Corrine is filing as head of household and has 2023 taxable income of $35,000 which includes $23,000 of 5%/15% gain. What is the tax on her taxable income using the alternative tax method? (a) $1,750. (b) $3,918. (c) $4,200. (d) $2,350. 11. Martha has both long term and short term capital gains and losses. The result of netting these gains and losses is a net long term capital loss. Martha has no qualified dividend income. Also, Martha's taxable income puts her in the 24% tax bracket. Which of the following is correct? (a) Martha will not benefit from the special treatment for long term capital gains. (b) Martha will have a capital loss deduction. (c) Martha will use Parts I, II, and III of 2023 Form 1040 Schedule D. (d) All of the above. 12. In order to qualify for like kind exchange treatment under Section 1031, which of the following requirements must be satisfied? (a) The form of the transaction is an exchange. (b) Both the property transferred and the property received are held either for productive use in a trade or business or for investment. (c) The exchange must be completed by the end of the second tax year following the tax year in which the taxpayer relinquishes his or her like kind property. (d) Both (a) and (b)

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