Question
QUESTION 1 Roger is one of your young clients, but he is rather successful after graduating with his degree in Cyber Security and has a
- QUESTION 1
Roger is one of your young clients, but he is rather successful after graduating with his degree in Cyber Security and has a good job with a defense contractor. In addition, Roger inherited a rather large estate from his parents after they passed in a horrible accident. He received the estate 2 months ago, and his investment advisor wants to reallocate his holdings into riskier investments.
As a result, Roger has come to you asking you to calculate his capital gains and losses for this action. The following items will be sold for the following gains.
| Asset | Date Bought and Price | Date Sold and Price |
| 75 Shares of IBM Stock | 04/23/2015 for $18,000 | 03/05/2020 for $7,000 |
| 200 Shares of Mitsui Bank | 04/06/2020 for $15,000 | 07/06/2020 for $9,500 |
| 750 Newmont Mining | 05/24/2016 for $10,000 | 07/09/2020 for $18,000 |
| 200 Shares of ExxonMobil | 03/06/2020 for $16,000 | 09/20/2020 for $14,000 |
| 300 Shares of Bitcoin Dist. | 03/16/2019 for $6,000 | 03/16/2020 for $25,000 |
Calculate the Capital Gains/Loss from above.
| a. | $16,000 Long Term, ($7,500) Short Term | |
| b. | $8,500 Long Term | |
| c. | $8,500 Short Term | |
| d. | ($3,000) Long Term, $11,500 Short Term |
5 points
QUESTION 2
Roger is one of your young clients, but he is rather successful after graduating with his degree in Cyber Security and has a good job with a defense contractor. In addition, Roger inherited a rather large estate from his parents after they passed in a horrible accident. He received the estate 2 months ago, and his investment advisor wants to reallocate his holdings into riskier investments.
As a result, Roger has come to you asking you to calculate his capital gains and losses for this action. The following items will be sold for the following gains.
| Asset | Date Bought and Price | Date Sold and Price |
| 75 Shares of IBM Stock | 04/23/2015 for $18,000 | 03/05/2020 for $7,000 |
| 200 Shares of Mitsui Bank | 04/06/2020 for $15,000 | 07/06/2020 for $9,500 |
| 750 Newmont Mining | 05/24/2016 for $10,000 | 07/09/2020 for $18,000 |
| 200 Shares of ExxonMobil | 03/06/2020 for $16,000 | 09/20/2020 for $14,000 |
| 300 Shares of Bitcoin Dist. | 03/16/2019 for $6,000 | 03/16/2020 for $25,000 |
Assume that one of the assets inherited was a rare, original Walt Disney Cinderella castle, valued at over $37,000. Assuming the asset was held for 14 months, what would be the tax rate on the sale of this asset?
| a. | 20% | |
| b. | 0% | |
| c. | 15% | |
| d. | 28% |
5 points
QUESTION 3
Roger is one of your young clients, but he is rather successful after graduating with his degree in Cyber Security and has a good job with a defense contractor. In addition, Roger inherited a rather large estate from his parents after they passed in a horrible accident. He received the estate 2 months ago, and his investment advisor wants to reallocate his holdings into riskier investments.
As a result, Roger has come to you asking you to calculate his capital gains and losses for this action. The following items will be sold for the following gains.
| Asset | Date Bought and Price | Date Sold and Price |
| 75 Shares of IBM Stock | 04/23/2015 for $18,000 | 03/05/2020 for $7,000 |
| 200 Shares of Mitsui Bank | 04/06/2020 for $15,000 | 07/06/2020 for $9,500 |
| 750 Newmont Mining | 05/24/2016 for $10,000 | 07/09/2020 for $18,000 |
| 200 Shares of ExxonMobil | 03/06/2020 for $16,000 | 09/20/2020 for $14,000 |
| 300 Shares of Bitcoin Dist. | 03/16/2019 for $6,000 | 03/16/2020 for $25,000 |
Would the artifact be subject to the Net Investment Income Tax, and if so, how much?
| a. | Yes, but at 3.8% | |
| b. | No, personal artifacts are not considered investments under the IRS laws. | |
| c. | Yes, at 15% | |
| d. | Yes, but at graduated rates of 0%, 15%, or 20% |
5 points
QUESTION 4
What is the limit on usage in order for a residential property to qualify as a personal use asset?
| a. | 5% of personal use | |
| b. | 14 days of personal use | |
| c. | 14 days of rental use | |
| d. | 95% of personal use |
5 points
QUESTION 5
If a taxpayer rents out a home during the year and there is a $30,000 loss at the end of the year, where does this loss get reported, and how is it treated? Assume the taxpayer makes $200,000 per year (AGI) and the property qualifies as a rental property.
| a. | Form 8621 and the loss is fully allowed | |
| b. | Schedule E and the loss is allowed up to $25,000 | |
| c. | Form 8582 and the loss is carried over until either there is passive income, or the activity is disposed of. | |
| d. | Form 4797 and the loss is fully allowed as 1231 loss against ordinary income. |
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Fundamentals Of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
16th Edition
0357517571, 978-0357517574
