1. Alan purchased a machine for use in his business. Dennis\' costs in connectio
ID: 2385660 • Letter: 1
Question
1. Alan purchased a machine for use in his business. Dennis' costs in connection with thispurchase were as follows:
Note to seller $33,000
Cash paid to seller 5,000
State sales tax 2,400
Freight to place of business 1,500
Wages paid to workers to install machine 4,200
What is the amount of Dennis' basis in the machine?
A) $33,000
B) $40,400
C) $41,900
D) $46,100
2. Mark purchased 50 shares of Short Corporation for $500. During the current year, Short
declared a 10% stock dividend. What is the basis per share before and after the stock dividend is distributed?
A) Before After B) Before After
$10 $10 $10 $9.09
C) D)
Before After Before After
$10 $11 $9.09 $10
3. John sold the following securities during 2011:
Date Acquired Date Sold Sales Price Basis
A 6-15-2008 3-30-2011 $ 8,500 $12,500
B 7-12-2011 10-1-2011 $ 7,000 $ 9,000
C 1-15-2011 6-21-2011 $14,000 $13,000
D 4-2-2006 12-29-2011 $20,000 $15,000
What is John's net capital gain or loss for the year?
A) NSTCG of $1,000 and NLTCG of $1,000
B) $1,000 NSTCL
C) 0
D) $1,000 NLTCG
4. John sold two securities in 2011:
Purchased Sold Basis Sales Price
MASH 1-1-2010 5-10-2011 $10,000 $12,000
KMZ 12-2-2010 9-22-2011 $5,000 $4,000
John has a 25% marginal tax rate. What is the additional tax resulting from the above sales?
5. This year, Lauren sold several shares of stock held for investment. The following is a summary of her capital transactions for the year:
Acquired Sold This Year Selling Price Cost
02/15/this year 07/15 $2,200 $1,750
06/25/2006 08/01 3,500 2,300
09/25/this year 12/15 800 1,000
12/28/2008 06/15 750 900
What are the amounts of Lauren's capital gains (losses) for this year?
A) NLTG NSTG C) NLTG NSTG
$ 1,300 $-0- $ 1,050 $250
B) NLTG NSTG D) NLTG NSTG
850 $450 ($1,050) ($250)
Explanation / Answer
1. D) $46,100 ( add up all the numbers ) 2. D) Before After Before After $10 $11 $9.09 $10 3. Option - C ( add up all number in each column, 49500- 49500 = 0) 4. Additional tax = (16000-15000) x 0.25 = 250 5. Option - D
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