Chapter 16 Class Questions 2011

Chapter 16 Class Questions 2011 - Bob Ryan DePaul...

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Bob Ryan DePaul University Class Questions Accounting 380 Tax Treatment of Individuals and Property Transactions Chapter 16 – Property Transactions: Capital Gains and Losses 1. The tax law requires that capital gains and losses be separated from other types of gains and losses because an alternative tax calculation may be used when taxable income includes net long-term capital gain. 4. An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating. The taxpayer immediately sells the note to a bank for less than the note’s stated value. The taxpayer has an ordinary loss. 9. Real property subdivided for resale into lots, even if no substantial physical improvements have been made to the property, always causes the gain from sale of the lots to be treated as ordinary income. 12. As a general rule, the sale or exchange of an option to buy or sell property results in capital gain or loss if the property subject to the option is (or would be) a capital asset in the hands of the option holder. 16. A lease cancellation payment received by a lessee is generally not treated as an exchange because the lease extinguished is not a capital asset. 22.
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This note was uploaded on 01/27/2012 for the course ACC 548 taught by Professor Ryan during the Spring '11 term at DePaul.

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Chapter 16 Class Questions 2011 - Bob Ryan DePaul...

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