Tax Test Answers

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  • Topic: Capital gain, Capital asset, Taxation
  • Pages : 6 (970 words )
  • Download(s) : 1445
  • Published : February 9, 2013
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* Question 1
5 out of 5 points
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| An artist's painting is not a capital asset when held by the artist.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
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* Question 2
0 out of 5 points
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| Taxpayers are allowed to offset net short-term capital losses with net long-term capital gains.Answer| | | | | Selected Answer:|  False|
Correct Answer:|  True|
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* Question 3
0 out of 5 points
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| Net short-term capital gains may be offset by net long-term capital losses.Answer| | | | | Selected Answer:|  False|
Correct Answer:|  True|
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* Question 4
0 out of 5 points
| |
| Accounts receivable are capital assets.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  False|
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* Question 5
0 out of 5 points
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| If property is received from a decedent, the taxpayer who receives the property has the same basis in the property as the decedent.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  False|
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* Question 6
5 out of 5 points
| |
| For purposes of taxation of capital gainsAnswer| | | | | Selected Answer:|  b. Gains on Section 1231 assets may be treated as long-term capital gains, while losses in some cases may be deducted as ordinary losses| Correct Answer:|  b. Gains on Section 1231 assets may be treated as long-term capital gains, while losses in some cases may be deducted as ordinary losses|

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* Question 7
5 out of 5 points
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| An asset's adjusted basis is computed as:Answer| | | | | Selected Answer:|  a. Original basis + capital improvements - accumulated depreciation| Correct Answer:|  a. Original basis + capital improvements - accumulated depreciation|

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* Question 8
5 out of 5 points
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| If insurance proceeds exceed the taxpayer's basis in property destroyed by fire, the taxpayer may be required to recognize a gain.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
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* Question 9
5 out of 5 points
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| Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year. What is the amount of Martha's taxable income after deducting the allowed capital loss?Answer| | | | | Selected Answer:|  c. $42,000|

Correct Answer:|  c. $42,000|
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* Question 10
0 out of 5 points
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| An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?Answer| | | | | Selected Answer:|  a. $5,000|

Correct Answer:|  b. $10,000|
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* Question 11
5 out of 5 points
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| If a taxpayer is relieved of a liability on the disposition of property, the amount of the liability should be included in the amount realized on the sale or other disposition.Answer| | | | | Selected Answer:|  True|

Correct Answer:|  True|
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* Question 12
5 out of 5 points
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| For the 2011 tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,800 long-term capital loss and a $1,500 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to 2012?Answer| | | | | Selected Answer:|  a. $300|

Correct Answer:|  a. $300|
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* Question 13
5 out of 5 points
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| Perry acquired raw land as an investment in 1996. The land cost $60,000. In 2011, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer's note for $110,000. Assume that Perry uses the installment method to recognize the gain and receives only the $10,000 down payment in the year of sale. How much gain should Perry recognize in 2011?Answer| | | |...
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