Chapter 689 12 Property Transactions

Chapter 689 12 Property Transactions - Chapter 689 12...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 689 12 Property Transactions: Treatment of Capital and Section 1231 Assets TRUE- FALSE QUESTIONS CHAPTER 12 *Some of the true-false questions have been adapted from the IRS Examinations. 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. 2. On receipt of a gift of property purchased by the donor in 2004 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. 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. 7. On February 9, 2008, Ed Earlson purchased a rare gem as an investment. On August 26, 2008, he exchanged it for another rare gem in a nontaxable exchange. On February 10, 2009, he sold it for cash. Any gain or loss on the sale is a long-term capital gain or loss. 8. In March 2008, Jim Jorges formed a small business corporation and issued Section 1244 small business stock. In November 2009, 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 les 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. 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 rm 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. 14. A sale or exchange must occur in order to recognize capital gains and losses. 15. If the sale or exchange of a patent quali es for capital gain treatment, the holding period of the inventor determines whether the gain is long-term or short-term. 16. For property to be held long-term, it must be held for one year. 17. The maximum capital loss deductible in any one year by a taxpayer is generally $3,000 with an inde nite carryover period. 18. If a taxpayer s stock in a corporation becomes worthless as a result of the corporation s insolvency during the tax year, the taxpayer s loss is a capital loss as if it occurred on the last day of the year. 19. In a nontaxable exchange involving a capital asset, the holding period of the old asset is added on to the holding
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 15

Chapter 689 12 Property Transactions - Chapter 689 12...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online