#1
Which of the following is a capital asset?
Inventory
Land held for sale in the ordinary course of business
Accounts receivable
Machinery used in business
#2
What is the tax treatment for gains on the sale of a capital asset held for more than one year?
Taxed at ordinary income tax rates
Taxed at a special long-term capital gains rate
Exempt from tax
Taxed at a higher rate than short-term gains
#3
Which of the following is not considered a capital asset?
Stocks
Bonds
Real estate used in a trade or business
Accounts receivable
#4
What is the holding period for a capital asset to be considered a long-term capital gain or loss?
Held for more than 6 months
Held for more than 1 year
Held for more than 18 months
Held for more than 2 years
#5
Which of the following is true regarding the tax treatment of collectibles?
Gains on collectibles are taxed at a lower rate than other capital gains
Losses on collectibles can only be used to offset gains on collectibles
Collectibles are exempt from capital gains tax
Collectibles are not considered capital assets
#6
What is the tax rate on short-term capital gains for most taxpayers?
#7
Which of the following is true regarding the tax treatment of dividends?
Dividends are taxed at ordinary income tax rates
Dividends are taxed at a lower rate than other capital gains
Dividends are exempt from tax
Dividends are taxed at a higher rate than other capital gains
#8
What is the tax treatment for gains on the sale of collectibles?
Taxed at ordinary income tax rates
Taxed at a special long-term capital gains rate
Exempt from tax
Taxed at a higher rate than short-term gains
#9
Which of the following is a true statement about the tax treatment of capital losses?
Capital losses can only be used to offset capital gains
Capital losses can only be carried forward
Capital losses can be used to offset both capital gains and ordinary income up to certain limits
Capital losses are not deductible for tax purposes
#10
Under what circumstances is the sale of a personal residence exempt from capital gains tax?
If the residence has been owned for at least 2 years and the gain is less than $250,000 for an individual ($500,000 for a married couple)
If the residence has been owned for at least 5 years and the gain is reinvested in another personal residence
If the residence has been used as a rental property for at least 3 years
If the residence is located in a designated historic district
#11
Which of the following is not a valid method for valuing property for tax purposes?
Fair market value
Adjusted basis
Purchase price
Assessed value
#12
What is the maximum tax rate for long-term capital gains for most taxpayers?
#13
Which of the following is a requirement for a capital asset to be considered 'held for investment'?
The asset must be actively traded
The asset must be held for speculative purposes
The asset must be held for the production of income
The asset must be held for personal use
#14
Under what circumstances can a taxpayer deduct a casualty loss on property?
If the loss is covered by insurance
If the loss is due to a federally declared disaster
If the loss is due to normal wear and tear
If the loss is due to theft
#15
Which of the following is a requirement for a capital asset to be considered 'held for personal use'?
The asset must be actively traded
The asset must be held for speculative purposes
The asset must be held for the production of income
The asset must be used primarily for personal purposes
#16
Which of the following is an example of a 1031 exchange?
Selling stocks and using the proceeds to buy bonds
Selling a personal residence and buying a larger one
Selling investment property and using the proceeds to buy similar property
Selling a business and using the proceeds to retire
#17
Which of the following is a characteristic of a like-kind exchange under Section 1031?
The properties exchanged must be similar in location
The properties exchanged must be similar in value
The properties exchanged must be held for investment or use in a trade or business
The properties exchanged must be sold simultaneously
#18
Which of the following is a requirement for a like-kind exchange under Section 1031?
The properties must be located in the same state
The properties must be exchanged for cash
The properties must be used for personal purposes
The properties must be identified within 45 days of the exchange