CHAPTER 16--PROPERTY TRANSA

CHAPTER 16--PROPERTY TRANSA - CHAPTER 16-PROPERTY...

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CHAPTER 16--PROPERTY TRANSACTIONS: CAPITAL GAINS AND LOSSES Student: ___________________________________________________________________________ 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. True False 2. The tax law requires that capital gains and losses be separated from other types of gains and losses because there are limitations on the deduction of net capital losses. True False 3. If a capital asset is sold at a loss, the holding period is not important. True False 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. True False 5. A business taxpayer sells depreciable business property with an adjusted basis of $40,000 for $32,000. The taxpayer held the property for more than a year. The taxpayer has an $8,000 long-term capital loss. True False 6. An individual taxpayer received a valuable painting from his uncle, a famous painter. The painter created the painting. After the taxpayer held the painting for two years, he sold it for a $400,000 gain. The gain is a long-term capital gain. True False 7. Since the Code defines what a capital asset is not, often the courts have to help determine what is and what is not a capital asset. True False 8. Section 1237 allows certain professional real estate developers capital gain treatment if they engage only in limited development activities. True False 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. True False 1
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10. A security that is a capital asset becomes worthless. The loss is deemed to have occurred on the first day of the tax year that the security becomes worthless. True False 11. Original issue discount is amortized over the life of the bond. True False 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. True False 13. The only things that the grantee of an option may do with the option are exercise it or let it expire. True False 14. When a patent is transferred, the most common forms of payment received by the transferor are a lump sum or periodic payment. True False 15. Franchising may involve one business obtaining a license to use a mode of operation belonging to another business. True
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This note was uploaded on 03/21/2012 for the course ACCT 442 taught by Professor Honig during the Spring '12 term at CUNY Lehman.

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CHAPTER 16--PROPERTY TRANSA - CHAPTER 16-PROPERTY...

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