Question 1 of 15.

Michael and Sierra are married and will file a joint return for 2020. During the year, Sierra sold 500 shares of XYZ stock. She had owned the shares since 2017, and her gain on the sale was $3,885. The couple's taxable income is $123,000. At what rate will the gain on the sale of the stock be taxed?

0%

15%

20%

22%

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Question 2 of 15.

James purchased 100 shares of OAK stock for $4,000 on March 31, 2020. He sold the shares on November 16, 2020 for $5,000. He has no current-year or carryover capital losses, and his only other income for the year consisted of wages. He will use the single filing status, and his 2020 taxable income is $88,000, placing him in the 24% tax bracket. What amount of tax will James owe on the gain from the sale of his shares of stock?

$150

$200

$240

$280

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Question 3 of 15.

Which of the following is an example of business-use property that can be further categorized as intangible, personal property?

A computer used exclusively for business purposes.

An internet domain name.

Items held in inventory.

Staplers, calculators, legal pads, and other office supplies.

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Question 4 of 15.

Review the following scenario, then determine the amount of the taxpayer's carryover loss. On October 23, 2020, Marielle sold shares of ABC stock that she had initially purchased on February 1, 2019. She had a capital gain of $2,000 from the sale of this stock. The same day she sold the shares of ABC, she also sold shares of DEF stock that she had acquired on April 22, 2019. Unfortunately, DEF did not perform well, and Marielle incurred a $6,000 loss at the time of sale. Marielle does not have any other capital gains or losses, and her only other income for the year consisted of $55,000 in wages. She has no prior-year carry over losses, and she will use the single filing status when she files her 2020 return. How much of the loss will Marielle carryover to the next tax year?

$0

$1,000

$3,000

$4,000

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Question 5 of 15.

Gerald will use the single filing status when he files his 2020 return. During the year, he sold 200 shares of ABC stock. He had owned the shares since 2018, and his gain on the sale was $1,867. His taxable income is $37,950. At what rate will the gain on the sale of the stock be taxed?

0%

12%

15%

20%

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Question 6 of 15.

When reporting information about the sale or exchange of a noncovered security, a broker or custodian is required to provide a taxpayer and the IRS with information about which of the following?

The date the property was acquired.

The date the property was sold or disposed of.

The taxpayer's cost or other basis.

Whether the gain or loss is short-term or long-term.

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Question 7 of 15.

During the year, Hannah sold shares of stock. Information about her cost basis and other details about the transaction were reported to her and to the IRS on a Form 1099-B, and no correction or adjustment is needed. How is this transaction reported on her tax return?

The amount of her capital gain or deductible loss is reported directly on page 1 of her Form 1040.

The amount of her capital gain or deductible loss is reported on Schedule 1, Additional Income and Adjustments to Income, then combined with her other sources of additional income (if any) before the total is reported on page 1 of her Form 1040.

The details of the transaction are reported on Form 8949, Sales and Other Dispositions of Capital Assets. The totals are then carried to Schedule D, Capital Gains and Losses. Finally, the net amount of her capital gain or deductible loss is reported on page 1 of her Form 1040.

Information about the transaction is reported directly on Schedule D, Capital Gains and Losses. The amount of her capital gain or deductible loss is then reported on page 1 of her Form 1040.

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Question 8 of 15.

In January 2018, Matilda paid $4,500 to acquire 150 shares of MNO stock. In December 2020, MNO declared a two-for-one stock split. If there were no subsequent adjustments, what is Matilda's current basis in the stock, and how many shares does she own?

$2,250 basis; 150 shares.

$2,250 basis; 300 shares.

$4,500 basis; 300 shares.

$9,000 basis; 150 shares.

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Question 9 of 15.

Which of the following definitions accurately describes a noncovered security?

The broker or custodian is required to report information about the cost basis of the security to both the taxpayer and the IRS.

Information about the sale or disposal of the security can be directly reported on Schedule D, Capital Gains and Losses.

The security was purchased before certain reporting requirements went into effect or is otherwise excluded from the IRS definition of a covered security.

The security was sold or disposed of during the year, and details about the cost basis and the acquisition date were reported to the taxpayer and the IRS on a consolidated statement rather than the IRS version of Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.

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Question 10 of 15.

Which of the following does the IRS consider a capital asset?

A design patent.

Fully depreciated appliances used in a rental property.

An IRS publication.

Virtual currency.

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Question 11 of 15.

Gavin inherited 250 shares of CGL stock when his father passed away on July 2, 2020. The stock had a fair market value of $32,000 on the date of death. His father had paid $10,000 when he purchased the stock in 2007, and there were no subsequent adjustments to his basis. What is Gavin's basis in the shares of stock he inherited?

$0

$10,000

$22,000

$32,000

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Question 12 of 15.

Which of the following is a type of real property that can also be classified as personal-use property?

A motion-detecting camera system purchased by a taxpayer and installed in their main home.

A rare baseball card, purchased for potential increase in value.

Stocks and bonds held in a standard investment account.

A taxpayer's main home.

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Question 13 of 15.

Rod will use the single filing status when he files his 2020 return. Most of his income is from wages, but he does have a capital gain of $5,000 from the sale of stock. His adjusted gross income is $207,000. How much of his income is subject to the 3.8% net investment income tax?

$0

$2,000

$5,000

$7,000

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Question 14 of 15.

Which of the following taxpayers is/are subject to the net investment income tax?

Bethany and Kyle. They are married and will file a joint return. Their only income consists of a $2,000 capital gain distribution from a mutual fund they own and income from wages. Their 2020 adjusted gross income is $265,000.

Geri. She will use the single filing status. All her income is from wages, although she did purchase a painting for $25,000 at the beginning of the year. At the end of the year, she was thrilled to learn that its appraised value was $30,000. She continues to hold the painting, hoping it will increase in value even more. Geri's 2020 adjusted gross income is $245,000.

Marlin. He is married but will file a separate return. His only income consists of a $5,000 capital gain from the sale of stock and income from wages. Marlin's 2020 adjusted gross income is $112,000.

Tyree. He will use the single filing status. He sold shares of stock during the year and incurred a capital loss of $9,000. He is able to use part of the loss to offset his income from wages, and his 2020 adjusted gross income is $195,000.

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Question 15 of 15.

In 2020, Matt and Rhonda had a capital gain of $6,000 from the sale of stock. They also sold a piece of land during the year; they had purchased the land in 2015 as an investment. Unfortunately, the value of the land decreased, and they incurred a $5,000 loss at the time of sale. They had no other capital gains or losses during the year, and they had no prior-year carryover losses. How much of the loss from the sale of the land may the couple use to offset their ordinary income?

$0

$1,000

$3,000

$5,000

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