Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Losses on sales between related parties are realized but not recognized.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The sale at a loss of machinery that was used in a trade or business and held for more than one year results in which of the following types of loss?

Accepted Answer

A) Capital. 
B) §291. 
C) §1231. 
D) §1245. 
E) None of the choices are correct. 
A) Capital. 
B) §291. 
C) §1231. 
D) §1245. 
E) None of the choices are correct.

Question 5

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

Accepted Answer

A) Machinery. 
B) Automobile. 
C) Business cell phone. 
D) Land. 
E) None of the choices are correct. 
A) Machinery. 
B) Automobile. 
C) Business cell phone. 
D) Land. 
E) None of the choices are correct.

Question 6

Collins Corporation, of Camden, Maine, wants to exchange its manufacturing facility for Rockland Company's building.Both parties agree that Collins's facility is worth $200,000 and that Rockland's building is worth $175,000.Collins will not enter into the transaction unless it qualifies as a like-kind exchange.If Collins wants to avoid gain, what could the parties do to equalize the value exchanged but still allow the exchange to qualify as a like-kind exchange?

Accepted Answer

Rockland could equalize the transaction

Question 7

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

Accepted Answer

$12,000.
The amount realized is everythi

Question 8

Which of the following is not usually included in an asset's tax basis?

Accepted Answer

A) Purchase price. 
B) Sales tax. 
C) Shipping costs. 
D) Installation costs. 
E) None of the choices are correct. 
A) Purchase price. 
B) Sales tax. 
C) Shipping costs. 
D) Installation costs. 
E) None of the choices are correct.

Question 9

Kristi had a business building destroyed in an earthquake.The old building was purchased for $250,000, and $80,000 of depreciation deductions had been taken.Her insurance proceeds were $550,000.Although the replacement property was much larger and nicer than her old building, Kristi's new property qualified as replacement property.She acquired the new property 13 months after the earthquake for $620,000.What is the amount of Kristi's realized gain and recognized gain and the basis in her new property?

Accepted Answer

$380,000 realized gain, $0 recognized ga

Question 10

A deferred like-kind exchange does not help accomplish which of the following objectives?

Accepted Answer

A) To facilitate finding replacement property. 
B) To help acquire the replacement property. 
C) To reduce the possibility that the seller must receive cash (boot)that will taint the transaction. 
D) To certify the taxpayer's Form 8824-Like-kind exchanges. 
E) All of the choices are correct. 
A) To facilitate finding replacement property. 
B) To help acquire the replacement property. 
C) To reduce the possibility that the seller must receive cash (boot)that will taint the transaction. 
D) To certify the taxpayer's Form 8824-Like-kind exchanges. 
E) All of the choices are correct.

Question 11

Which of the following results in an ordinary gain or loss?

Accepted Answer

A) Sale of a machine at a gain. 
B) Sale of stock held for investment. 
C) Sale of a §1231 asset. 
D) Sale of inventory. 
E) None of the choices are correct. 
A) Sale of a machine at a gain. 
B) Sale of stock held for investment. 
C) Sale of a §1231 asset. 
D) Sale of inventory. 
E) None of the choices are correct.

Question 12

An installment sale is any sale where at least a portion of the sale proceeds is received in a subsequent taxable year.

Accepted Answer

A) True 
 B)False

Question 13

Peroni Corporation sold a parcel of land valued at $300,000.Its basis in the land was $250,000.For the land, Peroni received $150,000 in cash in the current year and a note providing Peroni with $150,000 in the subsequent year.What is Peroni'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 the choices are correct. 
A) $0, $50,000. 
B) $10,000, $40,000. 
C) $25,000, $25,000. 
D) $50,000, $0. 
E) None of the choices are correct.

Question 14

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

Accepted Answer

A) $7,500 §1231 loss. 
B) $5,000 §1231 loss. 
C) $7,500 ordinary gain. 
D) $7,500 capital gain. 
E) None of the choices are correct. 
A) $7,500 §1231 loss. 
B) $5,000 §1231 loss. 
C) $7,500 ordinary gain. 
D) $7,500 capital gain. 
E) None of the choices are correct.

Question 15

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago.Sarah had purchased the stock for $20,000 several years earlier.What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

Accepted Answer

$3,000 long-term capital loss if sold fo

Question 16

A parcel of land is always a capital asset.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not used in the calculation of the amount realized:

Accepted Answer

A) Cash. 
B) Adjusted basis. 
C) Fair market value of other property received. 
D) Buyer's assumption of liabilities. 
E) All of the choices are used. 
A) Cash. 
B) Adjusted basis. 
C) Fair market value of other property received. 
D) Buyer's assumption of liabilities. 
E) All of the choices are used.

Question 18

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 the choices are correct. 
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 the choices are correct.

Question 19

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. 
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.

Question 20

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

Accepted Answer

$10,000 ordinary gain.
§1245 r

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

Losses on sales between related parties are realized but not recognized.

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

The sale at a loss of machinery that was used in a trade or business and held for more than one year results in which of the following types of loss?

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

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

Which of the following is not usually included in an asset's tax basis?

A deferred like-kind exchange does not help accomplish which of the following objectives?

Which of the following results in an ordinary gain or loss?

An installment sale is any sale where at least a portion of the sale proceeds is received in a subsequent taxable year.

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago.Sarah had purchased the stock for $20,000 several years earlier.What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

A parcel of land is always a capital asset.

Which of the following is not used in the calculation of the amount realized:

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

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?

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

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

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

Losses on sales between related parties are realized but not recognized.

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

The sale at a loss of machinery that was used in a trade or business and held for more than one year results in which of the following types of loss?

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

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

Which of the following is not usually included in an asset's tax basis?

A deferred like-kind exchange does not help accomplish which of the following objectives?

Which of the following results in an ordinary gain or loss?

An installment sale is any sale where at least a portion of the sale proceeds is received in a subsequent taxable year.

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago.Sarah had purchased the stock for $20,000 several years earlier.What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

A parcel of land is always a capital asset.

Which of the following is not used in the calculation of the amount realized:

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

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?

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

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