#1
Which of the following is a capital asset?
Land held for sale in the ordinary course of business
ExplanationLand held for sale in the ordinary course of business is considered a capital asset.
#2
What is the tax treatment for gains on the sale of a capital asset held for more than one year?
Taxed at a special long-term capital gains rate
ExplanationGains on the sale of a capital asset held for more than one year are taxed at a special long-term capital gains rate.
#3
Which of the following is not considered a capital asset?
Accounts receivable
ExplanationAccounts receivable are not considered capital assets.
#4
Which of the following is a true statement about the tax treatment of capital losses?
Capital losses can be used to offset both capital gains and ordinary income up to certain limits
ExplanationCapital losses can be used to offset both capital gains and ordinary income up to certain limits.
#5
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)
ExplanationThe sale of a personal residence is exempt from capital gains tax if owned for at least 2 years, with a gain less than $250,000 for an individual ($500,000 for a married couple).
#6
Which of the following is not a valid method for valuing property for tax purposes?
Purchase price
ExplanationPurchase price is not a valid method for valuing property for tax purposes.
#7
Which of the following is an example of a 1031 exchange?
Selling investment property and using the proceeds to buy similar property
ExplanationAn example of a 1031 exchange is selling investment property and using the proceeds to buy similar property.
#8
Which of the following is a characteristic of a like-kind exchange under Section 1031?
The properties exchanged must be held for investment or use in a trade or business
ExplanationIn a like-kind exchange under Section 1031, the properties exchanged must be held for investment or use in a trade or business.
#9
Which of the following is a requirement for a like-kind exchange under Section 1031?
The properties must be identified within 45 days of the exchange
ExplanationIn a like-kind exchange under Section 1031, the properties must be identified within 45 days of the exchange.