Boston exchanges a machine used in his trade or business for another machine.

Boston exchanges a machine used in his trade or business for another machine. In addition, he gives shares of Intel stock which have a fair market value of $27,000 and a basis of $13,000. The old machine has an adjusted basis of $30,000 and the new machine has a fair market value of $80,000. What is the recognized gain or loss and the basis of the new machine? a. $14,000 and $57,000. b. $23,000 and $57,000. c. $14,000 and $80,000. d. $23,000 and $80,000. e. None of the above.

What is the recognized gain or loss and how is it classified?

On August 10, 2003, an investor purchased 1,000 shares of Mauve Corporation for $30,000. On January 2, 2004, the stock became worthless. What is the recognized gain or loss and how is it classified? a. $3,000 STCL. b. $30,000 STCL. c. $3,000 LTCL. d. $30,000 LTCL. e. None of the above.

Rachel operates a hardware store as a sole proprietorship. Which of the following items are capital assets in the hands of Rachel?

Rachel operates a hardware store as a sole proprietorship. Which of the following items are capital assets in the hands of Rachel? a. The vacant lot next to her store used as a parking lot for customers. b. Sixteen tool boxes that have been in inventory for over a year. c. A note receivable that was given to her by a customer in payment of the balance due on the customer’s account at the store. d. Stock in which Rachel invested some of the store’s excess cash. e. None of the above.

Rica purchased for $4,500 a $5,000 bond when it was issued two years ago. Rica amortized $250 of the original issue discount and then sold the bond for $4,875. Which of the following statements is correct?

Rica purchased for $4,500 a $5,000 bond when it was issued two years ago. Rica amortized $250 of the original issue discount and then sold the bond for $4,875. Which of the following statements is correct? a. Rica has $125 of long-term capital gain. b. Rica has $250 of long-term capital gain. c. Rica has $375 of long-term capital gain. d. Rica has $125 long-term capital loss. e. None of the above.

On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc. at $40 per share. He purchased the option for $3,000.

On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Marco decided to let the option lapse as of December 1, 2004. On his 2004 income tax return, what should Marco report? a. A $3,000 long-term capital loss. b. A $3,000 short-term capital loss. c. A $3,000 § 1231 loss. d. A $3,000 ordinary loss. e. None of the above.