Taxation of Capital Assets and Property Transactions Quiz

Land held for sale in the ordinary course of business is considered a capital asset.

Gains on the sale of a capital asset held for more than one year are taxed at a special long-term capital gains rate.

Accounts receivable are not considered capital assets.

A capital asset must be held for more than 1 year to be considered a long-term capital gain or loss.

Gains on collectibles are taxed at a lower rate than other capital gains.

The tax rate on short-term capital gains for most taxpayers is 15%.

Dividends are taxed at a lower rate than other capital gains.

Gains on the sale of collectibles are taxed at a special long-term capital gains rate.

Capital losses can be used to offset both capital gains and ordinary income up to certain limits.

The 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).

Purchase price is not a valid method for valuing property for tax purposes.

The maximum tax rate for long-term capital gains for most taxpayers is 20%.

For a capital asset to be considered 'held for investment,' it must be held for the production of income.

A taxpayer can deduct a casualty loss on property if the loss is due to a federally declared disaster.

For a capital asset to be considered 'held for personal use,' it must be used primarily for personal purposes.

An example of a 1031 exchange is selling investment property and using the proceeds to buy similar property.

In a like-kind exchange under Section 1031, the properties exchanged must be held for investment or use in a trade or business.

In a like-kind exchange under Section 1031, the properties must be identified within 45 days of the exchange.