1. Which of the following properties is a capital asset?

Question 1 options:

1)	Artwork displayed in the taxpayer's home

2)

Inventory

3)	Equipment used in a business

4)	Office building

5)	None of the above

2. A taxpayer sold the land for $80,000. It originally cost $60,000. Selling expenses were $4,000. The proceeds are to be collected in installments over a four-year period. The taxpayer received $30,000, plus interest, in the current year. Under the installment method of reporting income, how much gain should be recognized in the current year?

Question 2 options:

1)

$4,000

2)

$5,000

3)

$6,000

4)

$16,000

5)

$20,000

3. A taxpayer purchased business machinery on February 16, 2012, for $25,000. The machinery was sold for $26,000 on November 10, 2013. Depreciation information is as follows:

	Accelerated depreciation taken	$9,000
	Straight-line depreciation (7-year life) would have been	5,000

What is the gain or loss on the sale of this machinery, and how will it be treated on the tax return?

Question 3 options:

1)	$4,000 ordinary income and $6,000 Section 1231 gain

2)	$4,000 ordinary income and $6,000 long-term capital gain

3)	$9,000 ordinary income and $1,000 Section 1231 gain

4)	$9,000 ordinary income and $1,000 long-term capital gain

5)	None of the above.

4. An unmarried taxpayer sells the following capital assets during the year.

	Property	Date Acquired	Date Sold	Sales Price	Adjusted Basis
	1	6/4/12	4/6/13	$10,000	$14,000
	2	1/8/11	12/15/13	15,000	17,000

The taxpayer carries over to the next tax year:

Question 4 options:

1)	a $4,000 short-term capital loss.

2)	a $1,000 short-term capital loss and a $2,000 long-term capital loss.

3)	a $3,000 short-term capital loss.

4)	a $2,000 short-term capital loss and a $1,000 long-term capital loss.

5)	A $3,000 long-term capital loss.

5. In 2014, Rick had a $12,000 gain on the sale of stock purchased three years ago, a $7,000 loss on the sale of a personal use automobile, and a $3,000 loss from the sale of land used in his business (owned for six years). These are Rick's only property transactions during the year. Once the netting process is complete, on his tax return Rick's gains and losses will be treated as:

Question 5 options:

1)	a $3,000 ordinary loss and a $9,000 net long-term capital loss.

2)	a $2,000 net long-term capital gain.

3)	a $3,000 ordinary loss and a $12,000 net long-term capital gain.

4)	a $9,000 net long-term capital gain.

5)	none of the above.