3 Questions Need Now Taking Exam

1.Otis, the taxpayer, has the following capital gains and losses for the year:
Short-term capital loss$1,750Short-term capital gain$1,000Long-term capital loss$2,000Long-term capital gain$4,860

What is his net short-term gain (loss)?
What is his net long-term gain (loss)?
What amount of the gain (loss) is entered on his 1040, (line 13) Capital gain or (loss) from Schedule D?

2. Edith owns farm land in western Montana. Her adjusted basis is $300,000 and the land is subject to a mortgage of $150,000. She exchanges her land for investment land in Wyoming owned by Dale. The investment land is worth $450,000. Dale assumes Edith’s mortgage on the land. What is the amount of Edith’s recognized gain or loss on the exchange and what is her adjusted basis in the land she received?

3. Claude works as a teacher during the year at the local high school. He also prepares taxes on a part-time basis. During 2019, Claude earned $84,800 from his job as a teacher. He also earned $12,000 preparing taxes from January to April 2019. He operates his tax preparation business as a sole proprietorship. Claude estimates that he will owe $2,036 more in income taxes for 2019. Explain what Claude should do so that he does not incur any underpayment penalties.


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