【導讀】14-1. CHAPTER14. Status:Q/P. TRUEORFALSE. capitalloss. collectiblesgain. Status:Q/P. process. losses. MULTIPLECHOICE. 14FranchisesUnc

　　

【正文】 in Property Transactions: Capital Gains and Losses, 167。 1231, Recapture 1413 2. Both shortterm and longterm holding periods, respectively, are: a. Eighteen months or less and more than eighteen months. b. Twentyfour months or less and more than twentyfour months. c. Six months or less and more than six months. d. Twelve months or less and more than twelve months. e. None of the above ANS: D The shortterm holding period is one year or less and the longterm holding period is more than one year. PTS: 1 DIF: 1 REF: p. 144 OBJ: 1 | 4 NAT: AICPA FNReporting | AACSB Analytic MSC: 5 min 3. The fixed assets of a business are: a. Generally capital assets throughout their holding period. b. Generally not capital assets. c. Generally are held for investment. d. Generally are held for personal use. e. None of the above. ANS: B Depreciable personal property and real estate (both depreciable and nondepreciable) used by a business are not capital assets. Thus, business fixed assets are generally not capital assets. PTS: 1 DIF: 1 REF: p. 144 OBJ: 1 | 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 5 min 4. A famous rock singer/songwriter sells the copyrights to all of his hit songs for $1,200,000 in cash. He has a zero tax basis for the copyrights and had created all of the copyrights at least 10 years before their sale. The taxpayer has: a. No gain or loss. b. A longterm capital gain of $1,200,000. c. A shortterm capital gain of $1,200,000. d. An ordinary gain of $1,200,000. e. None of the above. ANS: B Generally, the person whose efforts led to the copyright or creative work has an ordinary asset, not a capital asset. Since there was a zero tax basis for the copyrights, the entire gain of $1,200,000 would be ordinary gain. However, the taxpayer who has created the musical works may elect to treat the sale or exchange of copyrights in the musical works as the disposition of a capital asset. PTS: 1 DIF: 1 REF: p. 144 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 5 min 5. Monty is in the business of real estate development. He purchases vacant land that he intends to subdivide and resell. The land is: a. A capital asset. b. An ordinary asset. c. Inventory. d. b. and c. e. None of the above. 1414 2020 Comprehensive Volume/Test Bank ANS: D Since Monty is in the business of real estate development, the land is inventory and, therefore, an ordinary asset. PTS: 1 DIF: 1 REF: p. 148 OBJ: 2 NAT: AICPA FNReporting | AACSB Analytic MSC: 5 min 6. Sam operates a variety store as a sole proprietorship. Which of the following items are capital assets in the hands of Sam? a. The vacant lot next to his store that was purchased for use as a parking lot for his customers. b. Sixteen bicycles that have been in his inventory for over a year. c. A note receivable that was given to him by a customer in payment of the balance due on the customer’s account at the store. d. A corporate bond in which Sam invested some of the store’s excess cash. e. None of the above. ANS: D Section 1221 excludes all of the listed items from being capital assets except the bond. PTS: 1 DIF: 1 REF: p. 144 | p. 145 OBJ: 2 NAT: AICPA FNReporting | AACSB Analytic MSC: 5 min 7. Which of the following is a capital asset? a. The bicycle of a 10year old child. The child purchased the bicycle with money inherited from an aunt. b. The tools used by a selfemployed carpenter. c. The lots owned by a pany that is in the business of buying and reselling residential building lots. d. A ―mint‖ set of 1985 coins owned by a coin dealer and that is for sale on his website. e. None of the above. ANS: A The bicycle is a personal use asset and, therefore, a capital asset. The manner in which the child acquired the bicycle is not relevant. All of the other items are excluded from being a capital asset under 167。 1221. PTS: 1 DIF: 1 REF: p. 144 | p. 145 OBJ: 2 NAT: AICPA FNReporting | AACSB Analytic MSC: 5 min 8. Julia purchased vacant land in 2020 that she subdivided for resale as lots. All 10 of the lots were sold during 2020. The lots had a tax basis of $3,000 each and sold for $45,000 each. Julia made no substantial improvements to the lots. She acted as her own real estate broker。 so there were no sales expenses for selling the lots. Which of the following statements is correct? a. Julia must hold the lots for at least five years before she is eligible for the special capital gain treatment of 167。 1237. b. Some of the gain from the sale of the ten lots is longterm capital gain. c. All of the gain from the sale of the ten lots is longterm capital gain. d. To be eligible for the special capital gain treatment of 167。 1237, Julia must be a real estate dealer. e. None of the above. Property Transactions: Capital Gains and Losses, 167。 1231, Recapture 1415 ANS: A Julia must hold the land at least five years to be eligible for 167。 1237 treatment and must not be a dealer in lots. Since Julia does not satisfy this requirement, all of the gain is ordinary ine. PTS: 1 DIF: 1 REF: p. 148 OBJ: 2 NAT: AICPA FNMeasurement | AACSB Analytic MSC: 5 min 9. A worthless security had a holding period of 11 months when it became worthless on November 10, 2020. The investor who had owned the security had a basis of $10,000 for it. Which of the following statements is correct? a. The investor has a longterm capital loss of $10,000. b. The investor has a shortterm capital loss of $10,000. c. The investor has a nondeductible loss of $10,000. d. The investor has a longterm capital gain of $10,000. e. None of the above. ANS: A Section 165(g)(1) provides that if a security bees worthless during the tax year, the loss is treated as if it occurred on the last