51. Carlos bought a building for $113,000 in 2010. He built an addition to the b

ID: 2449949 • Letter: 5

Question

51. Carlos bought a building for $113,000 in 2010. He built an addition to the building for $26,000. In 2014, he sold it for $186,000. What was his long-term capital gain? (Points : 1) $113,000 $47,000 $73,000 $99,000 $186,000 Question 52. 52. An asset's adjusted basis is computed as: (Points : 1) Original basis + capital improvements - accumulated depreciation. Original basis - capital improvements + accumulated depreciation. Original basis + capital improvements + accumulated depreciation. Original basis + capital improvements + gain or loss realized. None of the previously listed choices. Question 53. 53. The adjusted basis of an asset may be determined by the: (Points : 1) Selling price + gain realized. Selling price - gain realized. Selling price + capital improvements - accumulated depreciation. Original basis + capital improvements - selling price. None of the previously listed choices. Question 54. 54. Bennett purchased a tract of land for $20,000 in 2005 when he heard that a new highway was going to be constructed through the property and the land would soon be worth $200,000. The highway project was abandoned in 2014 and the value of the land fell to $15,000. Bennett can claim a loss in 2014 of: (Points : 1) $0 $5,000 $165,000 $180,000 None of the previously listed choices Question 55. 55. Sol purchased land as an investment on January 12, 2005, for $85,000. On January 31, 2014, Sol sold the land for $25,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount realized (not gain realized) on the sale of the land? (Points : 1) $10,000 $25,000 $70,000 $95,000 None of the previous choices Question 56. 56. For purposes of determining the adjusted basis at the time of its sale, (Points : 1) Capital improvements are added to the basis. Ordinary repairs reduce the adjusted basis. Accumulated depreciation is added to the basis. The basis does not include costs such as title insurance and escrow fees related to the initial purchase. Question 57. 57. Which of the following is true about capital gains? (Points : 1) Short-term capital gains are not netted with other capital gains and losses. For 2014, long-term capital gains are subject to special tax treatment. Long-term capital gains are never taxed. Net short-term capital gains are not netted with net long-term capital losses. None of the previously listed choices. Question 58. 58. For the year 2014, Susan had salary income of $20,000. In addition she reported the following capital transactions during the year:(i) Long-term capital gain $7,000, (ii) Short-term capital gain $3,000, (iv) Long-term capital loss $(2,000), & (v) Short-term capital loss $(4,000). There were no other items includable in her gross income. What is the amount of her adjusted gross income for 2014? (Points : 1) $19,000 $20,000 $24,000 $25,000 None of the previous choices Question 59. 59. In December, 2014, Ben and Jeri (married, filing jointly) have a long-term capital gain of $55,000 on the sale of stock held for 4 years. They have no other capital gains and losses for the year. After standard deduction and personal exemptions, their ordinary income for the year, before the capital gain, is $73,800, making their total income for the year $128,800, ($73,800 + $55,000). In 2014, married taxpayers pay tax of $10,163 at 10-percent and 15-percent rates (from the tax rate schedules) on the first $73,800 of ordinary taxable income and 25 percent on ordinary taxable income up to $148,850. What is their total tax liability? (Points : 1) $10,163 $18,413 $19,320 $32,200 Question 60. 60. Robert and Becca are in the 25% tax bracket. They have a long-term capital gain of $28,000 and a long-term capital loss of $17,000 on sales of stock in 2014. What will their capital gains tax be in 2014? (Points : 1) $1,650 $2,200 $2,750 $11,000 None of the previously listed choices Question 61. 61. For purposes of taxation of capital gains: (Points : 1) Short-term capital gains are taxed at 5%. Ordinary income tax rates are applied to gains on collectibles. Gains on Section 1231 assets may be treated as long-term capital gains, while losses in some cases may be deducted as ordinary losses. Under the provisions of Section 1245, any gain recognized on the disposition of a Section 1245 asset will be classified as a capital gain. Question 62. 62. Martha has a net capital loss of $17,000 and other ordinary taxable income of $45,000 for the current year. What is the amount of Martha's capital loss carryforward? (Points : 1) $0 $10,000 $14,000 $17,000 None of the previous choices Question 63. 63. In 2014, Paul, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Paul incurred a $1,000 short-term capital loss and a $5,000 long-term capital loss. What is the amount of his long-term capital loss carryover to 2015? (Points : 1) $0 $2,000 $3,000 $5,000 None of the previous choices Question 64. 64. For the 2014 tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to 2015? (Points : 1) $0 $300 $500 $3,000 $3,500

Explanation / Answer

Answer:

51)

Purchase price = $113000.

Additions = $26000.

Total Expenses= $139000.

Sold for = $186000.

Net Gain = $47000.

52)

Original Basis + Capital Improvements – Accumulated Depreciation.

53)

Original Basis + Capital Improvements – Selling Price.

54)

Purchased Price (2005) – Value (2014)

= $20000 – $15000 = $5000.

55)

Amount realized = ($85000 - $25000 - $70000) $10000.

56)

Capital improvements are added to the basis.

57)

None of the previously listed choices.

58)

Adjusted Gross income for 2014 = ($20000 + $7000 + $3000) – ($2000 + $4000) = $24000.

59)

Total tax liability = $10163, as their total income is $128800 which is less than $148850.

60)

Capital gains tax = 25% of net gains ($28000 - $17000) = $2750.

61)

Ordinary income tax rates are applied to gains on collectibles.

62)

$17000.

63)

$5000.

64)

$1900 + $1600 = $3500.

51)