R4 Property 4 (T)

Question 1

Corporate Net Capital Gains

Answer 1

Net capital gains (net of short-term and long-term capital gains and losses) of a corporation are added to ordinary income and taxed at the regular rate

Question 2

Individual Collectibles and Small Business Stock

Answer 2

Long-term gains on collectibles, antiques, and small company stock are taxed at 28% for taxpayers not in 10, 15, or 25% income tax brackets

Question 3

Corporate Net Capital Losses

Answer 3

Corporations may not deduct any capital losses from ordinary income. Net capital losses are carried back 3 years and carried forward 5 years as a short-term capital loss

Question 4

Section 1245 Property

Answer 4

Generally personal properties used in a trade or business for over 12 months

Question 5

Section 1245 Recapture

Answer 5

Upon the sale of a section 1245 asset
the lesser of gain recognized or all accumulated depreciation is recaptured as ordinary income under section 1245
any remaining gain is a Section 1231 gain

Question 6

Expense Deduction in Lieu of Depreciation (Section 179 expense)

Answer 6

Each tax year, a taxpayer may deduct, as an expense in lieu of depreciation, a fixed amount of depreciable (machinery, equipment, and computer software) property

Question 7

Section 179 Expense 2014 Rules

Answer 7

The limit is $25,000 of new or used personal property that is acquired from an unrelated party during the year
The maximum amount is reduced dollar for dollar by the amount of property placed in service during the taxable year that exceeds $200,000
The deduction is not permitted when a net loss exists or if the deduction would create a net loss

Question 8

Half-Year Convention

Answer 8

In general, a half-year convention applies to personal property, under which such property placed in service or disposed of during a taxable year is treated as having been placed in service or disposed of at the midpoint of the year

Question 9

Mid-Quarter Convention

Answer 9

If more than 40% of depreciable personal property is placed in service in the last quarter of the year, the mid-quarter convention must be used

Question 10

MACRS Depreciable Years for Residential Rental Property

Answer 10

27 1/2 Years

Question 11

MACRS Depreciable Years for Non-residential Real Property

Answer 11

39 Years

Question 12

Mid-Month Convention

Answer 12

Straight-line depreciation is computed based upon the number of months the property was in service. One-half month is taken in the month the property is placed into service. One-half month is taken for the month the property is disposed of