1. In 2013, Lasheca will have taxable income of approximately $50,000. In 2013, Lasheca will also have a long-term capital loss of $22,000. Lasheca has no other capital gains or losses (in 2013 or prior years). For 2013, what is the maximum capital loss amount that Lasheca may use to offset her other income?
a. $22,000
b. $19,000
c. $3,000
d. $0
2. Assume the facts stated in the prior question. Assume further that for 2013 Lasheca offset her wages (with her capital loss) to the maximum extent permitted by law. What is the amount of Lasheca's capital loss carryover to 2014?
a. $22,000
b. $19,000
c. $3,000
d. $0
3. Yanela is a single taxpayer in the 35% tax bracket. Yanela wants to minimize her 2013 tax liability. Which of the following provides the LARGEST tax benefit to Yanela (assume that she may legally take advantage of each item in its entirety for 2013)?
a. A $5,000 exclusion from gross income.
b. A $1,000 deduction from gross income.
c. A $500 tax credit.
d. Options "a" and "b" would provide the largest tax benefits.
4. What was the MAXIMUM EARNED INCOME CREDIT amount that Jared and Janice could possibly take for 2013? Assume they are U.S. taxpayers filing a joint return with NO qualifying children.
a. $0
b. $487
c. $1,000
d. $3,000
5. Which item MOST resembles an interest free loan from the U.S. government?
a. First-time homebuyer credit for a closing that occurred in June of 2008
b. The earned income credit
c. The American Opportunity tax credit
d. The child tax credit
6. In early 2013, Kristen sold her personal residence to Jamie for $500,000. At the time of the sale, Kristen's adjusted basis was $300,000. Within three months of the sale, Kristen moved into a new residence she purchased for $450,000. What is Kristen's basis in her new residence?
a. $200,000
b. $250,000
c. $300,000
d. $450,000
7. Which of the following is TRUE?
a. When compared to exclusions, deferrals are more permanent in nature
b. When compared to deferrals, exclusions are more permanent in nature
c. Section 1031 provides for an elective deferral upon certain exchanges
d. All of the above
8. Kristen's business property (located in Yeniseyville USA) was condemned by the proper local authorities. Immediately before the condemnation, the property had a fair market value of $400,000 and Kristen's adjusted basis in the property was $100,000. The local authorities replaced Kristen's condemned property with similar Yeniseyville property having a fair market value of $300,000. What is Kristen's realized gain or loss relating to these matters?
a. $0
b. Loss of $100,000
c. Gain of $200,000
d. Gain of $300,000
9. Assume the facts stated in the prior question. What is Kristen's recognized gain or loss relating to such matters?
a. $0
b. Loss of $100,000
c. Gain of $200,000
d. Gain of $300,000
10. Assume the facts stated in the prior two questions. What is Kristen's basis in the Yeniseyville property she received as a result of the condemnation (i.e., what is Kristen's basis in the newly acquired property)?
a. $0
b. $100,000
c. $200,000
d. $300,000
11. In 2013, Janice and Jamie sold a house to Melissa for $500,000. Janice and Jamie had purchased the house for $900,000 in 2005 (during the real estate boom). Janice and Jamie started living in the house immediately after purchasing it and never made any capital improvements to it or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a LOSS may Janice and Jamie recognize on the sale to Melissa (assume that Janice and Jamie are married and file a joint return and itemize deductions)?
a. $0
b. $400,000 less 10% of their AGI
c. $399,900 less 10% of their AGI
d. $400,000
12. Inyam purchased land for $400,000 in 1988. The land was valued at $900,000 on July 1, 2013, when Inyam died. Inyam's son Johnathan inherited the land. What basis would Johnathan have in the land as a result of the inheritance?
a. $900,000
b. $400,000
c. Inyam's adjusted basis on July 1, 2013 (if different than $400,000)
d. $0
13. Assume the same facts stated in the previous question. Which of the following is most likely TRUE, if Johnathan sold the land in September 2013 for $1,000,000?
a. Johnathan's 2013 gain is short-term
b. In 2013, Johnathan should "recapture" any depreciation previously taken by Inyam on the land
c. In 2013, Johnathan will be taxed on the appreciation that occurred while Inyam held the land (provided that such appreciation was previously not taxed)
d. Johnathan's 2013 gain is long-term