Question 1

Which of the following is not an involuntary conversion?

Accepted Answer

A) Destruction caused by a hurricane. 
B) Eminent domain. 
C) A foreclosure. 
D) Fire damage. 
E) All of these choices are involuntary conversions. 
A) Destruction caused by a hurricane. 
B) Eminent domain. 
C) A foreclosure. 
D) Fire damage. 
E) All of these choices are involuntary conversions.

Question 2

Brandon, an individual, began business four years ago and has sold §1231 assets with $5,000 of losses within the last five years.Brandon owned each of the assets for several years.In the current year, Brandon sold the following business assets: $$\begin{array} { l r r r r } 
&&{ \text { Accurnulated } }\
\text { Asset } & \text { Original Cost } &\text { Depreciation } & \text { Gair/Loss } \

\text { Machinery } & \$ 30,000 & \$ 7,000 & \$ 10,000 \
\text { Land } & 40,000 & 0 & 20,000 \
\text { Building } & 90,000 & 20,000 & ( 5,000 )
\end{array}$$ Assuming Brandon's marginal ordinary income tax rate is 32 percent, what effect do the gains and losses have on Brandon's tax liability?
Use dividends and capital gains tax rates for reference.

Accepted Answer

A) $25,000 ordinary income and $8,000 tax liability. 
B) $25,000 §1231 gain and $3,750 tax liability. 
C) $13,000 §1231 gain, $12,000 ordinary income, and $5,790 tax liability. 
D) $12,000 §1231 gain, $13,000 ordinary income, and $5,960 tax liability. 
E) None of the choices are correct. 
A) $25,000 ordinary income and $8,000 tax liability. 
B) $25,000 §1231 gain and $3,750 tax liability. 
C) $13,000 §1231 gain, $12,000 ordinary income, and $5,790 tax liability. 
D) $12,000 §1231 gain, $13,000 ordinary income, and $5,960 tax liability. 
E) None of the choices are correct.

Question 3

§1250 recaptures the excess of accelerated depreciation over straight-line depreciation on real property placed in service before 1987 as ordinary income.

Accepted Answer

A) True 
 B)False

Question 4

The sale of computer equipment used in a trade or business for nine months 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 5

Residential real property is not like-kind with nonresidential real property.

Accepted Answer

A) True 
 B)False

Question 6

Tyson had a parcel of undeveloped investment land that he wanted to trade for a warehouse to be used in his business.He found a buyer willing to pay him $450,000 for the land.He transferred the land to a third party intermediary on April 1st of the current year.On May 10th, with the help of a commercial real estate agent, Tyson identified two suitable warehouses.On August 10th he made an offer on the first building and was rejected.On August 13th an offer was accepted on the second warehouse.On September 23rd the third party intermediary transferred $500,000 ($450,000 from the original property plus $50,000 from Tyson)to the seller and conveyed title to the warehouse to Tyson.Explain whether the exchange of property qualifies as a like-kind exchange.

Accepted Answer

Yes, the exchange of property qualifies

Question 7

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 8

When do unrecaptured §1250 gains apply?

Accepted Answer

A) When the taxpayer makes the election. 
B) It applies only when noncorporate taxpayers sell depreciable real property at a gain. 
C) It applies when §1245 recapture trumps §1250 recapture. 
D) It applies only when real property purchased before 1986 is sold at a gain. 
E) None of the choices are correct. 
A) When the taxpayer makes the election. 
B) It applies only when noncorporate taxpayers sell depreciable real property at a gain. 
C) It applies when §1245 recapture trumps §1250 recapture. 
D) It applies only when real property purchased before 1986 is sold at a gain. 
E) None of the choices are correct.

Question 9

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 the choices are correct. 
A) $800 gain. 
B) $1,000 gain. 
C) $1,200 loss. 
D) $1,400 loss. 
E) None of the choices are correct.

Question 10

Andrea sold a piece of machinery she used in her business for nine 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

Which of the following is not an involuntary conversion?

§1250 recaptures the excess of accelerated depreciation over straight-line depreciation on real property placed in service before 1987 as ordinary income.

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

Residential real property is not like-kind with nonresidential real property.

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?

When do unrecaptured §1250 gains apply?

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?

Andrea sold a piece of machinery she used in her business for nine 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?

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

Which of the following is not an involuntary conversion?

§1250 recaptures the excess of accelerated depreciation over straight-line depreciation on real property placed in service before 1987 as ordinary income.

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

Residential real property is not like-kind with nonresidential real property.

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?

When do unrecaptured §1250 gains apply?

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?

Andrea sold a piece of machinery she used in her business for nine 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?

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

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?