1.On September 10, 2010, an investor purchased 1,000 shares of Melon Corporation for $10,000. On July 2, 2011, the stock became worthless. What is the recognized gain or loss and how is it classified?
a. $3,000 STCL.
b. $10,000 STCL.
c. $3,000 LTCL.
d. $10,000 LTCL.
e. None of the above.
2.Sophia purchased for $8,700 a $10,000 bond when it was issued two years ago. Sophia amortized $300 of the original issue discount and then sold the bond for $9,500. Which of the following statements is correct?
a. Sophia has $1,100 of long-term capital gain.
b. Sophia has $800 of long-term capital gain.
c. Sophia has $500 of long-term capital gain.
d. Sophia has $800 long-term capital loss.
e. None of the above.
3.Anthony lives in an apartment building and has a two-year lease that began eleven months ago. His landlord is willing to pay Anthony $3,000 to vacate the apartment immediately. The landlord wants to sell the building to a buyer who will convert the building into condominiums. Anthony's lease on the apartment is a capital asset, but has no tax basis. The $3,000 Anthony will receive if he accepts the landlord's offer will be:
a. A long-term capital gain.
b. A short-term capital gain.
c. An ordinary gain.
d. A short-term capital loss.
e. Excludible from gross income.
4. Gerard has a NLTCG of $20,000 and a NSTCL of $30,000. What is Gerard's 2010 capital loss deduction if Gerard's adjusted gross income for 2010 (before considering capital asset transactions) is $60,000?
a. $30,000.
b. $20,000.
c. $10,000.
d. $3,000.
e. None of the above.