Question -
1. In 2010, Dana had taxable income of approximately $75,000. In 2010, Dana also had a long-term capital loss of $18,000. Dana has no other capital gains or losses (in 2010 or prior years). For 2010, what is the maximum capital loss amount that Dana may use to offset her other income?
a. $18,000
b. $15,000
c. $3,000
d. $0
2. Assume the facts stated in the prior question. Assume further that for 2010 Dana offset her wages (with her capital loss) to the maximum extent permitted by law. What is the amount of Dana's capital loss carryover to 2011?
a. $18,000
b. $15,000
c. $3,000
d. $0
3. In 2010, Chiquita and Dennis sold a house to Alex for $750,000. Chiquita and Dennis had purchased the house for $1,000,000 in 2005 (during the real estate boom). Chiquita and Dennis 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. Because of the slow market, there were no selling expenses. How much of a loss may Chiquita and Dennis recognize on the sale to Alex (assume that Chiquita and Dennis are married and file a joint return and itemize deductions)?
a. $250,000
b. $250,000 less 10% of their AGI
c. $249,900 less 10% of their AGI
d. $0
4. ASSUME THAT 2009 IS THE APPLICABLE TAX YEAR. Natalie purchased land for $50,000 in 1987. The land was valued at $200,000 on June 1, 2009, when Natalie died. Natalie's son Branden inherited the land in 2009. What basis would Branden have in the land as a result of the 2009 inheritance?
a. $0
b. $50,000
c. Natalie's adjusted basis on June 1, 2009 (if different than $50,000)
d. $200,000
5. ASSUME THAT 2009 IS THE APPLICABLE TAX YEAR. Assume the same facts stated in the previous question. Which of the following is most likely TRUE, if Branden sold the land in November 2009 for $220,000?
a. In 2009, Branden should have "recaptured" any depreciation previously taken by Natalie on the land
b. In 2009, Branden should have "recaptured" any appreciation that occurred while Natalie held the land (provided that such appreciation was previously not taxed)
c. Branden's 2009 gain was short-term
d. Branden's 2009 gain was long-term