Question 1

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Accepted Answer

A)  $800 gain.
B)  $1,000 gain.
C)  $1,200 loss.
D)  $1,400 loss.
E)  None of these.F) C) and D)
G) A) and C)

Question 2

Which of the following is true regarding the §1231 look-back rule?

Accepted Answer

A)  It only applies when a §1231 loss occurs.
B)  It only applies when a §1231 gain occurs.
C)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years.
D)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years.
E)  None of these.F) A) and C)
G) A) and D)

Question 3

Which of the following is not a §1245 asset if held for more than one year?

Accepted Answer

A)  Machinery.
B)  Automobile.
C)  Computer.
D)  Land.
E)  None of these.F) None of the above
G) A) and C)

Question 4

Which of the following is not true regarding §1239?

Accepted Answer

A)  It only applies to related taxpayers.
B)  It only applies to gains on sales of depreciable property.
C)  It only applies to gains on sales of non-residential real property.
D)  It does not apply to losses.
E)  None of these.F) B) and C)
G) A) and E)

Question 5

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not true regarding an asset's adjusted basis?

Accepted Answer

A)  Tax adjusted basis is usually greater than book adjusted basis.
B)  Tax adjusted basis is usually less than book adjusted basis.
C)  Adjusted basis is cost basis less cost recovery deductions.
D)  Tax adjusted basis may change over timE.The tax adjusted basis is usually less than book adjusted basis because tax depreciation usually exceeds book depreciation.E) All of the above
F) B) and C)

Question 7

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 these.F) None of the above
G) D) and E)

Question 8

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

The adjusted basis is the cost basis less cost recovery deductions.

Accepted Answer

A) True 
 B)False

Question 10

Pelosi Corporation sold a parcel of land valued at $300,000. Its basis in the land was $250,000. For the land, Pelosi received $150,000 in cash in the current year and a note providing Pelosi with $150,000 in the subsequent year. What is Pelosi's recognized gain in the current and subsequent year, respectively?

Accepted Answer

A)  $0, $50,000.
B)  $10,000, $40,000.
C)  $25,000, $25,000.
D)  $50,000, $0.
E)  None of these.F) A) and D)
G) A) and B)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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?

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 these.F) A) and E)
G) C) and E)

Question 13

Which one of the following is not true regarding a like-kind exchange?

Accepted Answer

A)  Loss on like-kind property is not recognized.
B)  Gains on boot given are deferred.
C)  Losses on boot given are not recognized.
D)  Securities can be like-kind with any other securities.
E)  All of these.F) B) and E)
G) A) and B)

Question 14

What is the character of land used in an active trade or business for two years?

Accepted Answer

A)  Capital.
B)  Ordinary.
C)  §1231.
D)  Investment.
E)  None of these.F) A) and D)
G) A) and C)

Question 15

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.
Expla...

Question 16

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 17

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

Accepted Answer

The sale of a machine at a loss generate...

Question 18

Silver sold machinery to Gold, a related entity, which it used in its business for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Accepted Answer

$20,000 of ordinary income und...

Question 19

Why does §1250 recapture generally no longer apply?

Accepted Answer

A)  Congress repealed the code section.
B)  The Tax Reform Act of 1986 changed the depreciation of real property to the straight-line method.
C)  §1245 recapture trumps §1250 recapture.
D)  Because unrecaptured §1250 gains now apply to all taxpayers instead.
E)  None of these.F) D) and E)
G) All of the above

Question 20

Only accelerated depreciation is recaptured for §1245 assets.

Accepted Answer

A) True 
 B)False

Exam 11: Property Dispositions

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Correct Answer
verified

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Correct Answer
verified

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

Correct Answer
verified
The sale of a machine at a loss generate...
View 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 Answer
verified
Capital gain of $55,000.
Expla...
View Answer

Which of the following is true regarding the §1231 look-back rule?

Correct Answer
verified

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

Correct Answer
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The adjusted basis is the cost basis less cost recovery deductions.

Correct Answer
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What is the character of land used in an active trade or business for two years?

Correct Answer
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Correct Answer
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Silver sold machinery to Gold, a related entity, which it used in its business for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Correct Answer
verified
$20,000 of ordinary income und...
View Answer

Which of the following is not true regarding §1239?

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

Correct Answer
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Which one of the following is not true regarding a like-kind exchange?

Correct Answer
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Only accelerated depreciation is recaptured for §1245 assets.

Correct Answer
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A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Correct Answer
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Leesburg sold a machine for $2,200 on November 10^th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Correct Answer
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Correct Answer
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Which of the following is not true regarding an asset's adjusted basis?

Correct Answer
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Why does §1250 recapture generally no longer apply?

Correct Answer
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Which of the following is not a §1245 asset if held for more than one year?

Correct Answer
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Exam 11: Property Dispositions

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Correct AnswerverifiedShow Answer

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Correct AnswerverifiedShow Answer

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

Correct AnswerverifiedThe sale of a machine at a loss generate...View AnswerShow 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.Expla...View AnswerShow Answer

Which of the following is true regarding the §1231 look-back rule?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The adjusted basis is the cost basis less cost recovery deductions.

Correct AnswerverifiedShow Answer

What is the character of land used in an active trade or business for two years?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Silver sold machinery to Gold, a related entity, which it used in its business for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Correct Answerverified$20,000 of ordinary income und...View AnswerShow Answer

Which of the following is not true regarding §1239?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is not true regarding a like-kind exchange?

Correct AnswerverifiedShow Answer

Only accelerated depreciation is recaptured for §1245 assets.

Correct AnswerverifiedShow Answer

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Correct AnswerverifiedShow Answer

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not true regarding an asset's adjusted basis?

Correct AnswerverifiedShow Answer

Why does §1250 recapture generally no longer apply?

Correct AnswerverifiedShow Answer

Which of the following is not a §1245 asset if held for more than one year?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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The sale of a machine at a loss generate...
View Answer

Correct Answer
verified
Capital gain of $55,000.
Expla...
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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Correct Answer
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Correct Answer
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$20,000 of ordinary income und...
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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Correct Answer
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Leesburg sold a machine for $2,200 on November 10^th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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