Exam 8: Property Dispositions

Bastrop Inc.generated a $169,000 ordinary loss from operations this year.It also recognized $35,920 recaptured ordinary income,$18,000 net Section 1231 loss,and $125,750 net capital gain on the sale of assets.Compute Bastrop's net operating loss.

In its current tax year,PRS Corporation generated $300,000 ordinary income from the performance of consulting services for its clients.PRS sold two assets,recognizing a $20,000 gain on the first sale and a $31,000 loss on the second sale.Which of the following statements is false?

Several years ago,Nipher paid $70,000 to purchase equipment to use in its business.This year,it sold the equipment for $76,500.Accumulated MACRS depreciation through date of sale was $18,000.Determine the amount and character of Nipher's gain recognized.

Oslego Company,a calendar year taxpayer,sold land with a $400,000 tax basis for $635,000 in March 2019.The purchaser paid $50,000 cash at closing and gave Oslego an interest-bearing note for the $585,000 remaining price.In September,Oslego received $50,450 cash from the purchaser consisting of a $29,250 principal payment and a $21,200 interest payment.Assuming that Oslego does not elect out of the installment sale method,compute the company's 2019 gain recognized on sale and its tax basis in the note receivable on December 31.

Kopel Company transferred an inventory asset to Cassim LLC in exchange for Cassim's $230,000 interest-bearing note.Kopel's tax basis in the note is its $230,000 face value.

Mr.Jason realized a gain on sale of a residential apartment complex that he had placed in service in 1994.Accumulated MACRS depreciation on the complex was $311,800.The entire gain is characterized as Section 1231 gain.

Gain or loss realized on the disposition of property is recognized unless the tax law provides a nonrecognition exception.

Norbett Inc.generated $15,230,000 ordinary taxable income and realized a $238,000 net capital loss on the sale of marketable securities this year.Which of the following statements is false?

The general rule is that a net Section 1231 loss is treated as a capital loss and a net Section 1231 gain is treated as ordinary income.

In 2019,Mary recognized a $45,000 gain on the sale of Section 1231 property.Over the previous five-year period,Mary recognized the following net Section 1231 gains and (losses): 2018 ($28,000) 2017 $16,000 2016 ($30,000) Mary's 2019 gain is characterized as

Andrew sold IBM stock to his sister Susan for $6,000.Andrew purchased the stock two years ago for $8,000.Susan sold the stock through her broker for $7,300.How much gain or loss did Susan recognize on the sale?

Firm F purchased a commercial office building for business use in 2008 for $965,000.This year,the firm sold the building for $1 million.Accumulated MACRS depreciation through date of sale was $275,000.Which of the following statements is true?

CBM Inc.realized a $429,000 gain on sale of a commercial office building that the corporation placed in service in 1994.Accumulated MACRS depreciation on the complex was $311,800.The entire gain is characterized as Section 1231 gain.

Mrs.Beld sold marketable securities with a $79,600 tax basis to her daughter for $60,000 cash.Two years later,the daughter sold the securities through her broker for $93,000.Compute the daughter's gain recognized on sale.

Delour Inc.was incorporated in 2013 and adopted a calendar year.Here is a schedule of Delour's net Section 1231 gains and (losses)reported on its tax returns through 2018. In 2019,Delour recognized a $50,000 gain on the sale of business land.How is this gain characterized on Delour's tax return?

WQP Company generated $1,814,700 ordinary income from the sale of inventory to its customers.It also sold three noninventory assets during the year.Compute WQP's taxable income assuming that: a.The first sale resulted in a $10,400 ordinary gain,the second sale resulted in a $23,900 capital loss,and the third sale resulted in a $44,000 capital gain. b.The first sale resulted in a $79,100 capital loss,the second sale resulted in a $35,200 ordinary loss,and the third sale resulted in a $16,000 capital gain.

The abandonment of business equipment with a $6,019 adjusted basis results in a $6,019 Section 1231 loss.

The seller's amount realized on the sale of property equals any cash received plus the FMV of any property received plus any amount of debt relief to the seller.

A taxpayer that is using the installment sale method to recognize gain must recompute the gross profit percentage every year during the term of the installment note.

A fire destroyed business equipment that was worth $160,000 and had a $118,100 adjusted tax basis.The equipment was uninsured.The owner can recognize a $160,000 ordinary casualty loss.