Question

36.	In 2018, Ruth sold a painting for $25,000 that she had bought for her personal use in 1979 at a cost of $10,000. On her 2018 return, Ruth should treat the sale of the painting as a transaction resulting in:

A. Ordinary income.
B. Long-term capital gain.
C. No income as this is the sale of a personal asset.

37.	In 2018, Rex sold an auto for $10,000 that he had bought for his personal use in 2009 at a cost of $25,000. On his 2018 return, Rex should treat the sale of this personal asset as a transaction resulting in:

A. Ordinary income.
B. Long-term capital gain.
C. No gain or loss, as the auto was a personal use asset.

38.	Which of the following items must Forms 1099-B include?

A. Cost-basis information for all sales transactions.
B. Cost-basis information for all covered security sales transactions.
C. Cost-basis information for all capital gain or loss sales transactions.

39.	A taxpayer received a Form 1099-B reporting proceeds and basis for a 2018 sale of stock. Which of the following statements is NOT CORRECT regarding the proper reporting of 1099-B information in 2018?

A. Transactions reported on Form 1099-B for which basis was reported to the IRS and for which the taxpayer has no adjustments must be reported on Form 8949.
B. Taxpayers may simply separate all Form 1099-B amounts into a short and long term summary, and report directly on revised Schedule D, Lines 1a (short-term) and 8a (long-term).
C. Transactions reported on Form 1099-B for which basis was reported to the IRS and for which the taxpayer has no adjustments may be excluded from reporting on Form 8949.

40.	The lowest tax rate with respect to capital gains is afforded to which one of the following?

A. Sale of collectibles.
B. Sales subject to unrecaptured §1250 rules.
C. Gains from the sale of publicly traded stock.

Answer 1

(1.)Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss.  if you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

in the given question Ruth sold a painting for $25,000 that she had bought for her personal use in 1979 at a cost of $10,000. Ruth should treat the sale of the painting as Long term Capital gain On her 2018 return.

(2)..Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss.  if you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

in the given question Rex sold a Auto for $25,000 that she had bought for her personal use in 2009 at a cost of $10,000. Rex should treat the sale of the Auto as Long term Capital gain On her 2018 return.

(3)..Brokers must submit this form to the IRS as well as sending a copy directly to every customer who sold stocks, options, commodities, or other securities during the tax year. The IRS requires submission of the form to serve as a record of a taxpayer’s gains or losses.Hence in the present question  Cost-basis information for all covered security sales transactions must includes in form 1099-B

(4).A. Transactions reported on Form 1099-B for which basis was reported to the IRS and for which the taxpayer has no adjustments must be reported on Form 8949 is NOT CORRECT

(5).The lowest tax rate with respect to capital gains is afforded to Gains from the sale of publicly traded stock.Hence option C is correct.