Taxing of capital gains

Congress made the decision to tax capital gains at a lower rate than ordinary income. Why do you think they did that?

What is Anne’s realized gain?

29. Anne sold her home for $260,000 in 2005. Selling expenses were $15,000. She had purchased it in 1998 for $190,000. During the period of ownership, Anne had done the following: • Deducted $50,500 office-in-home expenses, which included $14,500 in depreciation. • Deducted a casualty loss for residential trees destroyed by a hurricane. The total loss was $19,000 (after the $100 floor and the 10%-of-AGI floor), and Anne’s insurance company reimbursed her for $13,500. • Paid street paving assessment of $7,000 and added sidewalks for $11,000. • Installed an elevator for medical reasons. The total cost was $20,000, and Anne deducted $12,000 as medical expenses. What is Anne’s r... click for more

Calculate Bonnie’s basis for the printer.

32. Bonnie owns a personal computer (adjusted basis of $3,000) that she uses exclusively in her business. Bonnie transfers the computer and cash of $1,500 to Green Computers for a laser printer (worth $5,500) also to be used in her business. a. Calculate Bonnie’s recognized gain or loss on the exchange. b. Calculate Bonnie’s basis for the printer.

Which ones are capital assets?

13. All of the following assets are held by Chuck, who is not in business. Which ones are capital assets? a. Ten shares of Green Motors common stock. b. A note Chuck received when he loaned $3,000 to a friend. c. Chuck’s personal use automobile. d. A letter written by Abraham Lincoln that Chuck purchased at an auction. Chuck is a collector of Lincoln memorabilia.

How much of Ruth’s $5,000 capital loss carries over to 2006?

29. For 2005, Ruth has gross income of $8,300 and a $5,000 long-term capital loss; she claims the standard deduction. Ruth is 35 years old and single with three dependent children. How much of Ruth’s $5,000 capital loss carries over to 2006?