11. Capital Losses How are net capital losses of individuals
treated for tax purposes? How are net capital losses of corporations treated
for tax purposes?
12. Capital Gains Tax Rates What tax rates apply to an
individual’s long-term capital gains on the sale of stocks, antiques and
collectibles, and unrecaptured Section 1250 gains?
13. Section 1244 Stock What is the significance of having
stock qualify as Section 1244 stock?
14. Qualified Small Business Stock Why could it be very
advantageous to have a substantial investment in stock in a qualified small
business corporation?
15. Personal Residences What are the ownership and use tests
for excluding the maximum gain on the sale of a personal residence? Under what
circumstances may the owner of a personal residence exclude gain if the
required ownership and use tests are not met?
16. Capital Gains Tax Rates If an individual taxpayer is in
the 15 percent tax bracket, what is the maximum tax rate that applies to a. the
initial dollar of gain on an investment bond held for two years? b. the
long-term gain on collectibles? c. unrecaptured Section 1250 gain?
17. Realized Gain or Loss Charlie sold Whiteacre for $40,000
cash and the buyer assumed Charlie’s $19,000 mortgage on the property. Charlie
paid a realtor commission of $2,000 on the sale. What is his realized gain or
loss if Whiteacre has an adjusted basis of a. $47,000? b. $67,000?
18. Determination and Character of Gains and Losses Allan
received $5,000 cash and an auto worth $15,000 in exchange for land that was
encumbered by a $13,000 liability that the buyer assumed. a. What is the amount realized on this
sale? b. If Allan had a basis of $34,000
in the land, what is his gain or loss on the sale? c. If Allen has owned the land for five years
as an investment, what is the character of the gain or loss? d. How would your
answer to (c) change if the land had been used by Allan’s business as a parking
lot?
19. Determination and Character of Gain Corgill Corporation
sold land that it had used for storing old equipment. Corgill owned the land
for seven years and it had a basis of $234,000. Corgill received $50,000 cash
and a note for $100,000 and the purchaser assumed Corgill’s $150,000 mortgage
on the property. Corgill also paid a realtor’s fee of $15,000 and other selling
expenses of $2,000. a. What is Corgill’s
gain or loss on the sale and what is its character? b. If Corgill had held the land as an
investment, how would your answer change?
20. Determination and Character of Gain Bernadette sold her
home. She received cash of $40,000, the buyer assumed her mortgage of $180,000,
and she paid closing costs of $2,300 and a broker’s commission of $7,000. a. What is the amount realized on the
sale? b. If she has a basis in the home
of $138,000, what is her gain or loss on the sale? c. What is the character of
the gain or loss? d. How would your
answer to (c) change if Bernadette sold a building used by her sole
proprietorship rather than her personal residence?
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