Question : 31. If a taxpayer sells his personal residence and purchases a : 1313589

31. If a taxpayer sells his personal residence and purchases a new residence, realized gain may be recognized.

a. True

b. False

32. Which of the following is a capital asset?

a. A literary work held by the author

b. Real estate held by a developer

c. A taxpayer’s personal automobile

d. A truck used in a taxpayer’s business

e. None of the above

33. Which of the following is a capital asset?

a. Inventory held by a manufacturer

b. Accounts receivable held by a dentist

c. All property owned by a taxpayer other than property specifically noted in the law as an exception

d. Depreciable property and real estate used in a trade or business

34. Which one of the following is a capital asset?

a. Accounts receivable

b. Copyright held by the author

c. Securities held for investment

d. Inventories

e. All of the above are capital assets

35. Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2014, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

a. Long-term capital loss

b. Long-term capital gain

c. Short-term capital gain

d. Short-term capital loss

e. None of the above

36. Which of the following is not true about capital assets?

a. Real property used in a trade or business is not a capital asset.

b. Capital losses may be carried back for 3 years to offset capital gains in those years.

c. For 2014, net long-term capital gains are granted preferential tax treatment.

d. Individual taxpayers may deduct net capital losses of up to $3,000 per year.

e. Shares of stock held for investment are capital assets.

37. Which of the following sales results in a short-term gain/loss?

a. A capital asset bought on June 30, 2013 and sold June 20, 2014.

b. A capital asset bought on July 25, 2013 and sold August 19, 2014.

c. A capital asset bought on September 12, 2007 and sold August 19, 2014.

d. A capital asset bought on August 15, 2013 and sold August 16, 2014.

e. All of the above are long-term gains/losses.

38. If property is inherited by a taxpayer,

a. To the recipient, the basis for the property is the same as the basis to the decedent.

b. At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss.

c. At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year.

d. In general, the basis to the recipient is the fair market value at the decedent’s date of death.

39. Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2014, Sol sold the land for $20,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

a. $65,000 loss

b. $15,000 loss

c. $5,000 gain

d. $90,000 gain

e. None of the above

40. An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset’s adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

a. $5,000

b. $10,000

c. $20,000

d. $30,000

e. None of the above