Question 1

For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is not true regarding installment sales?

Accepted Answer

A) Only gains are eligible for installment sale reporting. 
B) Depreciation recapture is deferred in an installment sale. 
C) The gross profit percentage is needed to determine the annual gain recognized. 
D) Stock sales are ineligible for installment sale treatment. 
E) None of the choices are correct. 
A) Only gains are eligible for installment sale reporting. 
B) Depreciation recapture is deferred in an installment sale. 
C) The gross profit percentage is needed to determine the annual gain recognized. 
D) Stock sales are ineligible for installment sale treatment. 
E) None of the choices are correct. B

Question 3

Bozeman sold equipment that it uses in its business for $80,000.Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense.What is the amount and character of Bozeman's gain or loss?

Accepted Answer

A) $25,000 §1231 gain. 
B) $20,000 ordinary gain, and $5,000 §1231 gain. 
C) $5,000 ordinary gain, and $20,000 §1231 gain. 
D) $25,000 capital gain. 
E) None of the choices are correct. 
A) $25,000 §1231 gain. 
B) $20,000 ordinary gain, and $5,000 §1231 gain. 
C) $5,000 ordinary gain, and $20,000 §1231 gain. 
D) $25,000 capital gain. 
E) None of the choices are correct. B

Question 4

In a deferred like-kind exchange, the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial exchange.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true regarding depreciation recapture?

Accepted Answer

A) Changes the character of a loss. 
B) Changes the character of a gain. 
C) Changes the amount of a gain. 
D) Only applies to ordinary assets. 
E) None of the choices are correct. 
A) Changes the character of a loss. 
B) Changes the character of a gain. 
C) Changes the amount of a gain. 
D) Only applies to ordinary assets. 
E) None of the choices are correct.

Question 6

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 the choices are correct. 
A) Capital. 
B) Ordinary. 
C) §1231. 
D) Investment. 
E) None of the choices are correct.

Question 7

Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $50,000.Koch originally purchased Machine 1 for $75,000, and Machine 1's adjusted basis was $40,000 at the time of the exchange.Machine 2's seller purchased it for $65,000 and Machine 2's adjusted basis was $55,000 at the time of the exchange.What is Koch's adjusted basis in Machine 2 after the exchange?

Accepted Answer

A) $40,000. 
B) $50,000. 
C) $55,000. 
D) $75,000. 
E) None of the choices are correct. 
A) $40,000. 
B) $50,000. 
C) $55,000. 
D) $75,000. 
E) None of the choices are correct.

Question 8

Redoubt LLC exchanged an office building used in its business for a rental house.Redoubt originally purchased the building for $80,000, and it had an adjusted basis of $53,000 at the time of the exchange.The rental house had a fair market value of $62,000.Redoubt also received $7,000 of cash in the transaction.What is Redoubt's gain or loss recognized on the exchange? What is Redoubt's basis in the rental house?

Accepted Answer

$7,000 gain.$53,000 basis in the rental

Question 9

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment.Misha originally purchased the computer equipment for $15,000, and it had an adjusted basis of $11,000 at the time of the exchange.The computer equipment was worth $12,000 at the time of the exchange.Misha also received a used copier worth $2,000 in the transaction.What is Misha's realized and recognized gain/loss on the exchange?

Accepted Answer

$3,000 realized and recognized gain.
The

Question 10

Mary exchanged an office building used in her business for some land.Mary originally purchased the building for $45,000, and it had an adjusted basis of $20,000 at the time of the exchange.The land had a fair market value of $40,000.Mary also gave $4,000 to the seller in the transaction.What is Mary's adjusted basis in the land after the exchange?

Accepted Answer

A) $20,000. 
B) $24,000. 
C) $36,000. 
D) $40,000. 
E) None of the choices are correct. 
A) $20,000. 
B) $24,000. 
C) $36,000. 
D) $40,000. 
E) None of the choices are correct.

Question 11

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 nonresidential real property. 
D) It does not apply to losses. 
E) None of the choices are correct. 
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 nonresidential real property. 
D) It does not apply to losses. 
E) None of the choices are correct.

Question 12

Bull Run sold a computer for $1,200 on November 10th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

Accepted Answer

$600 loss realized.
The gain o

Question 13

Boot is not like-kind property involved in a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

Foreaker LLC sold a piece of land that it uses in its business for $52,000.Foreaker bought the land two years ago for $42,500.What is the amount and character of Foreaker's gain?

Accepted Answer

A) $9,500 §1221. 
B) $9,500 §1231. 
C) $9,500 §1245. 
D) $9,500 §1250. 
E) None of the choices are correct. 
A) $9,500 §1221. 
B) $9,500 §1231. 
C) $9,500 §1245. 
D) $9,500 §1250. 
E) None of the choices are correct.

Question 16

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's tax-adjusted basis for the computer?

Accepted Answer

$1,200.
The adjusted

Question 17

The sale for more than the original cost basis (before depreciation)of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

Ashburn reported a $105,000 net §1231 gain in Year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during Years 1-5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?

Accepted Answer

A) $0. 
B) $45,000. 
C) $60,000. 
D) $105,000. 
E) None of the choices are correct. 
A) $0. 
B) $45,000. 
C) $60,000. 
D) $105,000. 
E) None of the choices are correct.

Question 20

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Accepted Answer

A) True 
 B)False

For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Which of the following is not true regarding installment sales?

Bozeman sold equipment that it uses in its business for $80,000.Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense.What is the amount and character of Bozeman's gain or loss?

In a deferred like-kind exchange, the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial exchange.

Which of the following is true regarding depreciation recapture?

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

Which of the following is not true regarding §1239?

Bull Run sold a computer for $1,200 on November 10^th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

Boot is not like-kind property involved in a like-kind exchange.

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

Foreaker LLC sold a piece of land that it uses in its business for $52,000.Foreaker bought the land two years ago for $42,500.What is the amount and character of Foreaker's gain?

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

The sale for more than the original cost basis (before depreciation)of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

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

Ashburn reported a $105,000 net §1231 gain in Year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during Years 1-5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 11: Property Dispositions

For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Which of the following is not true regarding installment sales?

Bozeman sold equipment that it uses in its business for $80,000.Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense.What is the amount and character of Bozeman's gain or loss?

In a deferred like-kind exchange, the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial exchange.

Which of the following is true regarding depreciation recapture?

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

Which of the following is not true regarding §1239?

Bull Run sold a computer for $1,200 on November 10th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

Boot is not like-kind property involved in a like-kind exchange.

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

Foreaker LLC sold a piece of land that it uses in its business for $52,000.Foreaker bought the land two years ago for $42,500.What is the amount and character of Foreaker's gain?

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's tax-adjusted basis for the computer?

The sale for more than the original cost basis (before depreciation)of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

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

Ashburn reported a $105,000 net §1231 gain in Year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during Years 1-5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Bull Run sold a computer for $1,200 on November 10^th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

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