Question 1

Andrea sold a piece of machinery she used in her business for 9 months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized and what is the character of the gain or loss?

Accepted Answer

$5,000 ordinary loss.
The real...

Question 2

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Accepted Answer

A)   The like-kind property to be received must be identified within 45 days.
B)   The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer's taxable year.
C)   The like-kind property to be received must be identified within 180 days.
D)   There is no deadline for the identification of replacement property.
E)   All of the choices are correct.F) A) and D)
G) A) and C)

Question 3

Jessie sold a piece of land held for investment for $250,000. Jessie bought the land two years ago for $195,000. What is the amount and character of Jessie's gain?

Accepted Answer

Capital gain of $55,000.
The $...

Question 4

Realized gains are recognized unless there is specific exception.

Accepted Answer

A) True 
 B)False

Question 5

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Accepted Answer

A)   $40,000 ordinary and $360,000 §1231 gain.
B)   $200,000 ordinary and $200,000 §1231 gain.
C)   $400,000 ordinary gain.
D)   $400,000 capital gain.
E)   None of the choices are correct.F) A) and B)
G) B) and D)

Question 6

Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Accepted Answer

A)   §291.
B)   §1239.
C)   §1245.
D)   Unrecaptured §1250 gains.
E)   None of the choices are correct.F) B) and E)
G) A) and E)

Question 7

Which of the following gains does not result solely in an ordinary gain or loss?

Accepted Answer

A)   Sale of equipment held for less than a year.
B)   Sale of inventory.
C)   Sale of equipment where the gain realized exceeds the accumulated depreciation.
D)   Sale of equipment where the accumulated depreciation exceeds the gain realized.
E)   None of the choices are correct.F) B) and C)
G) C) and D) C

Question 8

Each of the following is True except for:

Accepted Answer

A)   a direct involuntary conversion occurs when property taken under imminent domain is replaced with other property.
B)   qualified replacement property rules are more restrictive than the like-kind property rules.
C)   an indirect involuntary conversion occurs when property is destroyed and insurance proceeds are used to purchase qualified replacement property.
D)   losses realized in involuntary conversions are deferred.
E)   all of the choices are True.F) A) and D)
G) B) and E)

Question 9

Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Accepted Answer

A)   $25,000 ordinary and $50,000 unrecaptured §1250 gain.
B)   $25,000 §1231 gain and $50,000 unrecaptured §1250 gain.
C)   $75,000 ordinary gain.
D)   $75,000 capital gain.
E)   None of the choices are correct.F) B) and D)
G) A) and D)

Question 10

Which of the following transactions results solely in §1245 gain?

Accepted Answer

A)   Sale of machinery held for less than one year.
B)   Sale of machinery held for more than one year and where the gain realized exceeds the accumulated depreciation.
C)   Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized.
D)   Sale of land held for more than one year and where the amount realized exceeds the adjusted basis.
E)   None of the choices are correct.F) C) and D)
G) None of the above

Question 11

The sale of land held for investment results in the following type of gain or loss?

Accepted Answer

A)   Capital.
B)   Ordinary.
C)   §1231.
D)   §1245.
E)   None of the choices are correct.F) A) and D)
G) C) and D) A

Question 12

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Accepted Answer

$10,000 ordinary and $40,000 §1231 gain.
For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Question 13

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Accepted Answer

$10,000 §1231 gain and $25,000 unrecaptu...

Question 14

Which of the following may qualify as an installment sale?

Accepted Answer

A)   Sale of inventory at a gain.
B)   Sale of securities.
C)   Sale of asset used in a business at a gain.
D)   Land sold at a loss.
E)   All of the choices qualify for installment sale treatment.F) A) and B)
G) B) and E)

Question 15

Which one of the following is not considered boot in a like-kind exchange?

Accepted Answer

A)   Cash.
B)   Other property.
C)   Mortgage given.
D)   Mortgage received.
E)   All of the choices can be considered as boot.F) C) and D)
G) A) and B)

Question 16

Reid had a business building destroyed in a fire. The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

Accepted Answer

$85,000 realized gain and $10,000 recogn...

Question 17

Ordinary gains and losses are obtained on the sale of investments.

Accepted Answer

A) True 
 B)False

Question 18

Sandra sold some equipment for $10,000 in cash, $1,000 of office products, the buyer assumption of her $1,500 loan, and incurred selling expenses of $500. What is the Sandra's amount realized in the transaction?

Accepted Answer

$12,000.
The amount realized is everythi...

Question 19

Winchester LLC sold the following business assets during the current year:
(1)  automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000;
(2)  machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000;
(3)  furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000;
(4)  computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000;
(5)  Winchester had unrecaptured §1231 losses of $3,000 in the prior 5 years.
What is the amount and character of Winchester's gains and losses before the 1231 netting process?  Assume all assets were held for more than one year.

Accepted Answer

A)   $3,000 ordinary loss, $0 §1231 loss.
B)   $7,000 ordinary gain, $10,000 §1231 loss.
C)   $7,000 ordinary loss, $4,000 §1231 gain.
D)   $1,000 ordinary gain, $4,000 §1231 loss.
E)   None of the choices are correct.F) A) and B)
G) A) and E)

Question 20

Manassas purchased a computer several years ago for $2,200. On November 10ᵗʰ of the current year, the computer was worth $800. If $1,000 of depreciation deductions had been taken, what is Manassas' tax adjusted basis for the computer?

Accepted Answer

$1,200.
The adjusted...

Exam 11: Property Dispositions

Andrea sold a piece of machinery she used in her business for 9 months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized and what is the character of the gain or loss?

Correct Answer
verified
$5,000 ordinary loss.
The real...
View Answer

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Correct Answer
verified

Jessie sold a piece of land held for investment for $250,000. Jessie bought the land two years ago for $195,000. What is the amount and character of Jessie's gain?

Correct Answer
verified
Capital gain of $55,000.
The $...
View Answer

Realized gains are recognized unless there is specific exception.

Correct Answer
verified

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Correct Answer
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Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Correct Answer
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Which of the following gains does not result solely in an ordinary gain or loss?

Correct Answer
verified
C

Each of the following is True except for:

Correct Answer
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Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Correct Answer
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Which of the following transactions results solely in §1245 gain?

Correct Answer
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The sale of land held for investment results in the following type of gain or loss?

Correct Answer
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A

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Correct Answer
verified
$10,000 ordinary and $40,000 §1231 gain. For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Correct Answer
verified
$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

Which of the following may qualify as an installment sale?

Correct Answer
verified

Which one of the following is not considered boot in a like-kind exchange?

Correct Answer
verified

Correct Answer
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$85,000 realized gain and $10,000 recogn...
View Answer

Ordinary gains and losses are obtained on the sale of investments.

Correct Answer
verified

Sandra sold some equipment for $10,000 in cash, $1,000 of office products, the buyer assumption of her $1,500 loan, and incurred selling expenses of $500. What is the Sandra's amount realized in the transaction?

Correct Answer
verified
$12,000.
The amount realized is everythi...
View Answer

Correct Answer
verified

Manassas purchased a computer several years ago for $2,200. On November 10ᵗʰ of the current year, the computer was worth $800. If $1,000 of depreciation deductions had been taken, what is Manassas' tax adjusted basis for the computer?

Correct Answer
verified
$1,200.
The adjusted...
View Answer

Exam 11: Property Dispositions

Andrea sold a piece of machinery she used in her business for 9 months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized and what is the character of the gain or loss?

Correct Answerverified$5,000 ordinary loss.The real...View AnswerShow Answer

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Correct AnswerverifiedShow Answer

Jessie sold a piece of land held for investment for $250,000. Jessie bought the land two years ago for $195,000. What is the amount and character of Jessie's gain?

Correct AnswerverifiedCapital gain of $55,000.The $...View AnswerShow Answer

Realized gains are recognized unless there is specific exception.

Correct AnswerverifiedShow Answer

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Correct AnswerverifiedShow Answer

Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Correct AnswerverifiedShow Answer

Which of the following gains does not result solely in an ordinary gain or loss?

Correct AnswerverifiedC

Each of the following is True except for:

Correct AnswerverifiedShow Answer

Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Correct AnswerverifiedShow Answer

Which of the following transactions results solely in §1245 gain?

Correct AnswerverifiedShow Answer

The sale of land held for investment results in the following type of gain or loss?

Correct AnswerverifiedA

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Correct Answerverified$10,000 ordinary and $40,000 §1231 gain. For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Correct Answerverified$10,000 §1231 gain and $25,000 unrecaptu...View AnswerShow Answer

Which of the following may qualify as an installment sale?

Correct AnswerverifiedShow Answer

Which one of the following is not considered boot in a like-kind exchange?

Correct AnswerverifiedShow Answer

Correct Answerverified$85,000 realized gain and $10,000 recogn...View AnswerShow Answer

Ordinary gains and losses are obtained on the sale of investments.

Correct AnswerverifiedShow Answer

Sandra sold some equipment for $10,000 in cash, $1,000 of office products, the buyer assumption of her $1,500 loan, and incurred selling expenses of $500. What is the Sandra's amount realized in the transaction?

Correct Answerverified$12,000.The amount realized is everythi...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Manassas purchased a computer several years ago for $2,200. On November 10ᵗʰ of the current year, the computer was worth $800. If $1,000 of depreciation deductions had been taken, what is Manassas' tax adjusted basis for the computer?

Correct Answerverified$1,200.The adjusted...View AnswerShow Answer

Correct Answer
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$5,000 ordinary loss.
The real...
View Answer

Correct Answer
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Correct Answer
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Capital gain of $55,000.
The $...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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$10,000 ordinary and $40,000 §1231 gain. For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Correct Answer
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$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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$85,000 realized gain and $10,000 recogn...
View Answer

Correct Answer
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Correct Answer
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$12,000.
The amount realized is everythi...
View Answer

Correct Answer
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Correct Answer
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$1,200.
The adjusted...
View Answer