Exam 11: Property Dispositions

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? Assume all assets were held for more than one year.

Odintz traded machinery for machinery. Odintz originally purchased its machine for $150,000 and the adjusted basis was $90,000 at the time of the exchange. The machinery received was purchased for $200,000, had an adjusted basis of $155,000 at the time of the exchange, and was subject to a mortgage of $50,000 that was paid off before the transfer. What is Odintz's adjusted basis in the new machinery after the exchange?

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

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?

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

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

Brandon, an individual, began business four years ago and has never sold a §1231 asset. Bra6n4d)on owned each of the assets for several years. In the current year, Brandon sold the followingbusiness assets: Assuming Brandon's marginal ordinary income tax rate is 35 percent, what effect do the gains and losses have on Brandon's tax liability?

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

Brandon, an individual, began business four years ago and has sold §1231 assets with $5,00065o) f losses within the last 5 years. Brandon owned each of the assets for several years. In the currentyear, Brandon sold the following business assets: Assuming Brandon's marginal ordinary income tax rate is 35 percent, what effect do the gains and losses have on Brandon's tax liability?

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

For a like-kind exchange, realized gain is deferred if the exchange is solely for like-kind property.

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

Which of the following is not true regarding §1239?

A parcel of land is always a capital asset.

Unrecaptured §1250 gains apply only to individuals.

Which of the following gains does not result solely in an ordinary gain or loss?

When does unrecaptured §1250 gains apply?

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?

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?

Which of the following realized gains results in a recognized gain?