Alistair Stanley needs to calculate the appropriate amounts of capital gains that should be included on his Form 1040, U.S. Individual Income Tax Return, for each item listed below. Unless specifically stated otherwise, each item was received or paid during 20XX.
Additional Information:
Mr. Stanley’s father passed away during the year, and he bequeathed his son some antique furniture that was valued at $55,000 (FMV) the day he died.
Mr. Stanley received a check as a beneficiary of his father’s individual life insurance policy.
Mr. Stanley sold stocks back to his employer. He exercised the option on these shares 15 years ago.
Mr. Stanley sold his house to move closer to his mom after his father passed. He owned the house for 8 years and paid $210,000 cash for it. Three years after the purchase, he put $15,000 worth of improvements into the property.
For each item, enter the appropriate amount in the associated cell. If the amount is zero, enter a zero (0). Round all amounts to the nearest whole dollar. For items B8 and B9, select from the option list provided the best answer for each question. Each choice may be used once, more than once, or not at all.
AB1QuestionAnswer2What are Mr. Stanley’s short-term gains?
3What is the adjusted basis of the property Mr. Stanley sold?
4What is the gain (loss) realized from the sale of the property?
5What is the capital gain (loss) recognized on the sale of the property?
6What is the ordinary income amount received for the stocks Mr. Stanley sold back to the company?
7What are the capital gains for the proceeds paid to Mr. Stanley from his father’s life insurance policy?
8Which form will Mr. Stanley need to complete in addition to Form 1040 to report his capital gains or losses?
9Two years after receiving the furniture, Mr. Stanley decides to sell it. If he makes a gain on the sale, is it considered to be long-term or short-term?