TAX3704 EXAM QUESTIONS AND ANSWERS 2023
The tax law requires that capital gains and losses be separated from other types of gains and losses.
Among the reasons for this treatment are:
a. Long-term capital gains may be taxed at a lower rate than ordinary gains.
b. Capital losses that are short-term are not deductible.
c. Net capital loss is deductible only up to $3,000 per year for individual taxpayers.
d. a. and c.
e. None of the above. - (answers)d. choices A&B
which of the following is not a tax status for an asset?
a. capital loss asset
b. capital asset
c. section 1231 asset
d. ordinary asset
e. all of these - (answers)a. capital loss asset
recognized gains and losses from the disposition of a capital asset may occur as a result of a
a. sale
b. exchange
c. casualty
d. condemnation
e. all of these - (answers)e. all of these
The possible holding periods for capital assets include:
a. short-term = held for 14 months or less
b. long term = greater than six months
c. long-term = greater than 12 months
d. short-term = greater than 12 months
, e. none of these - (answers)c. long-term = greater than 12 months
a business taxpayer sells inventory for $80,000. the adjusted basis of the property is $58,000 at the time
of the sale and the inventory had been held more than one year. the taxpayer has:
a. no gain or loss
b. sold a long-term capital asset
c. sold a short-term capital asset
d. an ordinary gain
e. none of the asset - (answers)d. an ordinary gain
Ramon is in the business of buying and selling securities. which of the following is a capital asset for
Ramon?
a. the securities he buy s and sells each day in the normal course of his business
b. the securities he designates as held for investment at the end of the day of acquisition
c. the securities he holds more than 12 months
d. all securities he owns
e. choices b and d - (answers)b. the securities he designates as held for investment at the end of the day
of acquisition
Michael is in the business of creating posters (display art) for the movie industry. he creates a poster and
sells it for a lump sum. he has:
a. sold a capital asset
b. sold an ordinary asset
c. no gain or loss
d. an ordinary gain
e. choices b and d - (answers)e. choices b and d
a painting that is not of investment quality is acquired by an individual for use in his home. it is later sold
at a loss of $45. which of the following statements is correct?
a. the painting was a capital asset
b. the loss on the painting is not deductible
The tax law requires that capital gains and losses be separated from other types of gains and losses.
Among the reasons for this treatment are:
a. Long-term capital gains may be taxed at a lower rate than ordinary gains.
b. Capital losses that are short-term are not deductible.
c. Net capital loss is deductible only up to $3,000 per year for individual taxpayers.
d. a. and c.
e. None of the above. - (answers)d. choices A&B
which of the following is not a tax status for an asset?
a. capital loss asset
b. capital asset
c. section 1231 asset
d. ordinary asset
e. all of these - (answers)a. capital loss asset
recognized gains and losses from the disposition of a capital asset may occur as a result of a
a. sale
b. exchange
c. casualty
d. condemnation
e. all of these - (answers)e. all of these
The possible holding periods for capital assets include:
a. short-term = held for 14 months or less
b. long term = greater than six months
c. long-term = greater than 12 months
d. short-term = greater than 12 months
, e. none of these - (answers)c. long-term = greater than 12 months
a business taxpayer sells inventory for $80,000. the adjusted basis of the property is $58,000 at the time
of the sale and the inventory had been held more than one year. the taxpayer has:
a. no gain or loss
b. sold a long-term capital asset
c. sold a short-term capital asset
d. an ordinary gain
e. none of the asset - (answers)d. an ordinary gain
Ramon is in the business of buying and selling securities. which of the following is a capital asset for
Ramon?
a. the securities he buy s and sells each day in the normal course of his business
b. the securities he designates as held for investment at the end of the day of acquisition
c. the securities he holds more than 12 months
d. all securities he owns
e. choices b and d - (answers)b. the securities he designates as held for investment at the end of the day
of acquisition
Michael is in the business of creating posters (display art) for the movie industry. he creates a poster and
sells it for a lump sum. he has:
a. sold a capital asset
b. sold an ordinary asset
c. no gain or loss
d. an ordinary gain
e. choices b and d - (answers)e. choices b and d
a painting that is not of investment quality is acquired by an individual for use in his home. it is later sold
at a loss of $45. which of the following statements is correct?
a. the painting was a capital asset
b. the loss on the painting is not deductible
