CHAPTER 8
CAPITAL GAINS AND LOSSES
Group 1 - Multiple Choice Questions
1.
C
(Section 8.1)
10. C
(Section 8.10)
2.
E
(Section 8.1)
11.
D
($12,000 + 3,000)
3.
E
($77,500 – 55,000)
(Section 8.10)
(Section 8.3)
12. E
($190,000 – 11,000 – 45,000)
4.
C
(Section 8.4)
– $250,000))
5.
C
8,000 + (15% x $50,000)
(Section 8.12)
(Section 8.4)
13. D
(Section 8.8)
6.
C
(10% x $14,300) + (15% x $15,700)
14. D
(Sections 8.6, 8.7)
+ (15% x $28,100) + (25% x
15. B
(Sections 8.6, 8.7)
$11,900)
16. E
(Section 8.7)
(Section 8.4)
17. A
(Section 8.12)
7.
C
$30,000 + $4,000 + $2,000
18. B
(Section 8.12)
– $5,000 (Section 8.6)
19. A
(Section 8.12)
8.
A
(Section 8.6)
20. B
($550,000 – 350,000) –
9.
D
(($150,000 – 90,000)
(18/24 x $250,000)
/ 150,000) x 30,000)
(Section 8.12)
(Section 8.9)
Group 2 - Problems
1.
a.
$11,000 short-term capital gain
= $25,000 – 14,000.
b.
$11,000 long-term capital gain
.
(Sections 8.1, 8.2, 8.3)
2.
a.
$128,500
= $30,000 + 105,000 – 6,500.
b.
$0 taxable gain;
the $53,500 gain ($128,500 – $75,000) is excluded from taxable income
(Sections 8.3, 8.12)
3.
$640,000
= $750,000 + 40,000 – 150,000.
(Section 8.3)
4.
a.
$4,000
gain = $12,500 – 8,500
b.
$3,900 loss
= $4,600 – 8,500.
Notice that since the fair market value of the gifted property
exceeded the basis of the property at the date of the gift, the recipient’s basis for gain and loss
is the same in both calculations
(Section 8.3)
5.
Sears stock
$10,000 – 13,000 = $3,000 long-term capital loss
Home Depot stock
$1,500 – 1,000 = $500 long-term capital gain
Net long-term capital loss = $2,500
Ford Motor bonds
$35,000 – 30,000 = $5,000 short-term capital gain
Short-term capital gain =
$2,500 ($2,500 net long-term capital loss and $5,000 net short-term
capital gain)
.
(Sections 8.1, 8.2, 8.3, 8.4)
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