122. Gwen inherited 100 shares of SuperShoes stock when her mother died on Octob
ID: 2602735 • Letter: 1
Question
122. Gwen inherited 100 shares of SuperShoes stock when her mother died on October 21, 2014; the fair market value of the stock was $20 per share. Her mother paid $200 per share when she purchased the stock March 1, 2005. If Gwen sells all 100 shares for $50 per share on July 3, 2016, how should she report the sale on her income tax return for 2016? A. $3,000 long-term capital gain B. $3,000 short-term capital gain $12,000 long-term capital gain $15,000 short-term capital loss C. D. 123. John and Jill Jones sold stock that resulted in a short-term capital loss of $5,000. They had no other capital transactions during the year. Their taxable income was $10,000. How much of the capital loss is deductble on their joint return and how much must be carried over to the next year? A $0 loss: $5,000 carryover B. $1,500 loss, $1,500 carryover C. $3,000 loss; $0 carryover D. $3,000 loss, $2,000 carryover 124. Brandt exchanged his collection of stamp albums for a tractor from Virgil in September 2016. The fair market value of the stamp albums is $3,000. The tractor has the same $3,000 fair market value. The collection of stamps cost Brandt $2,000 over the years to assemble. How should Brandt report this transaction on his 2016 tax return? A He reports it as a capital transaction with a $0 gain B. He is not required to report it because it is not taxable C. He attaches a statement to his return explaining that the exchange was for something of equal value D. He reports a $1,000 capital gain deduct expenses allocable to that portion of the home used for those business purposes. To meet this qualification all of the following must apply except 142. The general rule is that taxpayers who use a part of the home for legitimate business purposes can A Part of the home is exclusively used on a regular basis as the principal place of business for any of the trades or businesses B Pant of the home is exclusively used on a regular basis as a place of business used by patients, cients or of the home is exclusively used on a regular basis in connection with the trade or business it it is a separate structure that is not attached to the home Part of the home is used on a regular basis as a home office and family room used by the rest of the family for entertainment EX-22 inc © 2017 IRST,"Trant anExplanation / Answer
122. As the stocks are inherited, the value of the stocks as on the date of inheritence is considered as the basis for calculation of the capital gains and the capital gain is treated as long term as the stocks are inherited.
Hence in this case the capital gain would be ($50 (sale value) -$ 20 (value as on date of inheritence)*100 = (30*100) = $3000
Answer is A. $3000 long term capital gain
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123. Capital losses can be set off only from the head "Income from capital gains". Long term capital losses can be set off only against the long term capital gains where as the short term capital loss can be set off against the short term capital gain and also long term capital gains. If there are no enough capital gains to set off these losses, the loss can be carried forward for next 8 years to be set off appropriately.
Hence in current scenario, as the short term capital gain needs to be carried forward to next year, as there are no capital gains against which the loss can be set off. Hence answer is A
A. $0 Loss and $5000 carryover
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124. The sale of the collectible is a capital gain and Brandit has to report it as a capital gain.
Hence answer is
D. He reports as $1000 capital gain
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142. Answer is D. Part of the home is used on a regular basis as a home office and family room used by the rest of the family for entertainment
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