2014CompTopics12 - CCH Federal Taxation Comprehensive...

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Income Tax Fundamentals 2019
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Chapter 4 / Exercise 9
Income Tax Fundamentals 2019
Whittenburg/Gill
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CCH Federal Taxation Comprehensive Topics 2014 1. For purposes of determining the holding period for property, the holding period begins on the day the property is acquired and ends on the day before the sale of the property. a. True *b. False
2. On receipt of a gift of property purchased by the donor in 2008 the basis is determined by the donor's basis. The holding period begins on the day the gift is received.
3. Fully depreciated property used in a trade or business is a capital asset.
4. Some examples of capital assets are stocks and bonds held in a personal account, a personal residence, and household furnishings.
5. Real property used in a trade or business is a capital asset. a. True *b. False
6. Ned Newell transferred all substantial rights to a trade secret to an unrelated third party for $25,000. Ned must report the entire proceeds as ordinary income.
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The document you are viewing contains questions related to this textbook.
Income Tax Fundamentals 2019
The document you are viewing contains questions related to this textbook.
Chapter 4 / Exercise 9
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
7. On February 9, 2012, Ed Earlson purchased a rare gem as an investment. On August 26, 2012, he exchanged it for another rare gem in a nontaxable exchange. On February 10, 2013, he sold it for cash. Any gain or loss on the sale is a long-term capital gain or loss.
8. In March 2012, Jim Jorges formed a small business corporation and issued Section 1244 small business stock. In November 2013, the company went bankrupt and Jim incurred a $75,000 loss for amounts invested in the common stock of the small business corporation. If Jim files a joint return, he should report a $50,000 ordinary loss and a $25,000 long-term capital loss.
9. The ordinary loss provisions on small business stock (Code Sec. 1244) are available only to the original owner of the stock. *a. True b. False
10. Doug Draper's capital losses exceeded the $3,000 capital loss limitation. He may elect to carry the unused capital loss back to an earlier year.
11. Capital assets do not include inventory, depreciable property, copyrights, accounts receivable, or literary, musical or artistic compositions.
12. Securities held by a brokerage firm are capital assets.
13. Regardless of the length of the holding period, nonbusiness bad debts are considered short-term capital losses in the year they become completely worthless. *a. True b. False
14. A "sale or exchange" must occur in order to recognize capital gains and losses.

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