Tax MCQ: Income Tax Chapter 3

During 2014, Trevor has the following capital transactions:

LTCG $ 6,000
Long-term collectible gain 2,000
STCG 4,000
STCL 10,000

After the netting process, the following results:
a. Long-term collectible gain of $2,000.
b. LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000.
c. LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2015 of $3,000.
d. LTCG of $2,000.
e. None of these.

Answer: D

For the current year, David has a salary income of $80,000 and the following property transactions:

Stock investment sales—
Long-term capital gain $ 9,000
Short-term capital loss (12,000)
Loss on sale of camper (purchased 4 years ago and used for family vacations) (2,000)

What is David's AGI for the current year?

a. $76,000.
b. $77,000.
c. $78,000.
d. $89,000.
e. None of these.

Answer: B

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2014:

Long-term gain from the sale of a coin collection $11,000
Long-term gain from the sale of a land investment 10,000
Short-term gain from the sale of a stock investment 2,000
Kirby's tax consequences from these gains are as follows:

a. (5% × $10,000) + (15% × $13,000).
b. (15% × $13,000) + (28% × $11,000).
c. (0% × $10,000) + (15% × $13,000).
d. (15% × $23,000).
e. None of these.

Answer: C

Perry is in the 33% tax bracket. During 2014, he had the following capital asset transactions:

Gain from the sale of a stamp collection (held for 10 years) $30,000
Gain from the sale of an investment in land (held for 4 years) 10,000
Gain from the sale of stock investment (held for 8 months) 4,000
Perry's tax consequences from these gains are as follows:

a. (15% × $30,000) + (33% × $4,000).
b. (15% × $10,000) + (28% × $30,000) + (33% × $4,000).
c. (0% × $10,000) + (28% × $30,000) + (33% × $4,000).
d. (15% × $40,000) + (33% × $4,000).
e. None of these.

Answer: B