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ch 14 practice test

ch 14 practice test - ch 14 practice test Multiple Choice...

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ch 14 practice test Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The tax law requires that capital gains and losses be separated from other types of gains and losses. Among the reasons for this treatment are: a. Long-term capital gains may be taxed at a lower rate than ordinary gains. b. Capital losses that are short term are not deductible. c. Net capital loss is deductible only up to $3,000 per year for individual taxpayers. d. a. and c. e. None of the above. ____ 2. Monty is in the business of song writing. He writes jingles for television advertisements. He writes a jingle and sells it for a lump sum plus a royalty each time the jingle is played on TV. He has: a. Sold a capital asset. b. Sold an ordinary asset. c. No gain or loss. d. An ordinary gain. e. b. and d. ____ 3. Julia purchased vacant land in 2009 that she subdivided for resale as lots. All 10 of the lots were sold during 2010. The lots had a tax basis of $3,000 each and sold for $45,000 each. Julia made no substantial improvements to the lots. She acted as her own real estate broker; so there were no sales expenses for selling the lots. Which of the following statements is correct ? ____ 4. Sylvia purchased for $1,610 a $2,000 bond when it was issued two years ago. Sylvia amortized $200 of the original issue discount and then sold the bond for $1,800. Which of the following statements is correct ? ____ 5. A lessor is paid $45,000 by its commercial tenant as a lease cancellation fee. The tenant wanted to get out of its lease so it could move to a different building. The lessor had held the lease for three years before it was canceled. The lessor had a zero tax basis for the lease. The lessor has received:
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