Please note that some of the questions below required one or more answers. Thank you!

1.Kendra had the following transactions during the year. What is her income during the year?

Salary $60,000

LTCG from the sale of stock $25,000

Sale of 1231 asset $15,000 gain ($12,000 is section 1245 depreciation)

Sale of 1231 asset ($8,000) loss

Select one:

a. $

b. $67,000 Ordinary Income, $25,000 LTCG (1/15/20%)

c. $72,000 Ordinary Income; $20,000 LTCG (0/15/20%)

d. $40,000 Ordinary Income; $28,000 LTCG

2.Wilma owns a bakery. In 2018 she bought an oven for $10,000. In 2018 and 2019 she deducted depreciation of $3800. On 1/1/2020 she sold the equipment. Which of the following is true.

Select one or more:

a. If Wilma sells the equipment for more than the price she purchased it, and she sold no other equipment during the year, the gain will be taxed at ordinary income tax rates.

b. If Wilma sells the equipment for more than her purchase price, all of the depreciation taken is taxed at ordinary tax rates.

c. If Wilma sells the equipment for a lower price than she bought it and more than the adjusted basis she recognizes a gain.

d. If Wilma sells the equipment for more than the adjusted basis but less than the purchase price, only part of the depreciation will be taxed at ordinary rates.

e. If Wilma sells the equipment for a price lower than her purchase price minus the depreciation taken, none of the depreciation will be taxed at ordinary tax rates.

f. If Wilma sells the equipment for a higher price than she bought it, she recognizes 1231 gain.

g. If Wilma sells the equipment for the same price that she bought it she has no recognized gain or loss.

3.Zelda owned two pieces of land used in her business. She sold Land A for a $100,000 gain and Land B for a $120,000 loss. She sold no other property during the year. Which of the following is/are true with respect after netting the two transactions?

Select one:

a. Land A is an ordinary gain and Land B is an ordinary Loss

b. Land A is a LTCG and land B is a LTCL.

c. Land A is LTCG and Land B is an ordinary loss.

d. Land A is an ordinary gain and land B is a LTCL

4.Which of the following would result in a recognized capital loss (before netting process) to the taxpayer?

Select one or more:

a. Reesa purchased a vintage bottle of wine in 2015 for $8000. She sold it in 2020 for $7000.

b. Paula was in business. She had $20,000 of accounts receivable. She sold (factored) the accounts received to a bank for $18,000.

c. Jurgen sold only two parking lots used in his business. Land A had a gain of $30,000 and land B had a loss of $(10,000). After netting, Land A will have LTCG of $30,000 and Land B will have a LTCL of $10,000.

d. Tyler bought a house in 2016 for $500,000. He rented it out until he sold it for $450,000 in 2020.

e. Shiela's house was destroyed in a fire which was declared a federal disaster area.

f. Wendy purchased a house for $800,000. She rented it out for 5 years. She moved in the house for one year and sold it for $700,000. $100,000 is a LTCL.

5.Richard sold two machines used in his business. They were the only two assets sold during the year. After netting the two transactions, what is the result?

Machine 1 Cost $10,000 Acc.Depreciation $6,000 Amount realized $2,000

Machine 2 Cost $10,000 Acc.Depreciation $6,000 Amount realized $7,000

Select one:

a. $1000 ordinary income

b. $3000 Capital gain and $2000 Capital Loss

c. $3000 Capital gain and $2000 ordinary loss

d. $3000 capital loss

e. $3000 ordinary income and $2000 capital loss

6.Assume Brenda sold a painting at a loss in 2020. She sold no other property in 2020 and had no capital loss carryforwards. Brenda prefers that the painting:

Select one or more:

a. Inventory held in her business.

b. An investment.

c. Used as decoration in her business.

d. Used as decoration in her home.

7.Nancy purchased an antique cash register for $3000 in 2018. She sold it for $5,000 in 2020. She is in the 32% bracket. Which would Nancy prefer? Can be more than one choice.

Select one or more:

a. Nancy bought the cash register to decorate her home.

b. Nancy bought the cash register as an investment which the IRS accepts.

c. Nancy uses the cash register in her restaurant.

d. Nancy owns an antique store and sold the machine in her store.

8.Talia owns a print shop. She purchased a printing machine for $20,000 on 3/1/2018. She deducted a total of $9000 of depreciation in 2018, 2019 and 2020. She sells the machine in 2020. for $22,000. She is in the 31% bracket in all years. Assume she sold no other assets in 2020.

Select one or more:

a. Because Talia must recapture the deprecation and she is in the 31% bracket in all three years, the tax applicable to the depreciation recapture in the year of sale will be the same as the tax savings from the depreciation.

b. If Talia also sold land held in the business at a loss of $15,000, the taxpayer would have a net $13,000 1231 loss deductible as an ordinary loss.

c. If Congress permitted all of the gain in 2020 to be taxed at long-term capital gain rates, the taxpayer would be benefitting because her tax savings due to the depreciation was $9000 x 31%, but would pay tax on the $9000 at only 15%.

d. Talia has an $11,000 long-term Capital Gain.

9.Enzo has the following gains and losses:

$50,000 Salary

$30,000 Long-term capital gain from the sale of Stock

$15,000 Section 1231 Gain that is all unrecaptured Section 1250 Gain

$5000 Section 1231 Gain ($5000 is depreciation recapture) Section 1245 Property.

There are no other transactions during the year. What is the result of after netting the above transactions?

Select one or more:

a. $50,000 Ordinary and $50,000 LTCG

b. $55,000 Ordinary Income; $15,000 LTCG (25%); $30,000 LTCG (10/15/20%)

c. $30,000 LTCG; $70,000 Ordinary Income

d. $55,000 Ordinary Income, $45,000 LTCG

10.Ursula sells two 1231 assets: one is a Section 1245 property and the other is Section 1250 property. They both have the same gain or loss and the same amount of depreciation taken. Which is true?

Select one or more:

a. Section 1245 Recapture and Section 1250 Unrecaptured Gain result in the same tax if the taxpayer is in in the 22% bracket.

b. The taxpayer would prefer that she has no depreciation recapture.

c. Section 1250 recapture only benefits taxpayers in tax brackets greater than 25%.

d. Section 1245 Recapture and Section 1250 Unrecaptured depreciation will result in the same tax if the taxpayer recognizes a loss.

e. Section 1245 Recapture and Section 1250 Unrecaptured Gain result in the same tax if the taxpayer is in in the 37% bracket.

11.Vera purchased a rental house in Oakland. She paid $800,000 in 2015. She sold it in 2020 for $900,000. Her accumulated depreciation was $70,000. Her ONLY income or loss is from sale of this property in 2020. She has no other sales of property. Which of the following is true?

Select one or more: .20

a. If Shiela's marginal tax bracket is 22%, the depreciation recapture will be taxed at 25%

b. After netting, $60,000 of the gain will be taxed at the 10/15/20% LTCG rate.

c. If Shiela's tax bracket is 22%, the tax on depreciation recapture on sale of the house would be the same as it would be if she sold Section 1245 property.

d. If Shiela's marginal tax bracket is 32%, the depreciation recapture will be taxed at 25%.

e. Shiela has Section 1250 gain of $70,000 and Section 1231 Gain of $60,000.

12.Richard had the following items:

Salary $50,000

LTCG from sale of Stock $10,000

1231 gain on sale of land A $13,000

1231 loss on sale of land B ($20,000)

What is the result of the netting process?

Select one:

a. Ordinary Income $50,000; LTCG $10,000 (0/15/20% rate); 1231 Carryover $7000

b. $50,000 Ordinary Income; $23,000 LTCG; $20,000 Ordinary Loss

c. Ordinary Income $43,000, LTCG $10,000 (0/15/20%) rate

d. $30,000 Ordinary Income; $23,000 LTCG