Question 1

The sale of land held for investment results in the following type 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. A

Question 2

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

Accepted Answer

A)  Sale of equipment held for less than a year. 
B)  Sale of inventory. 
C)  Sale of equipment where the gain realized exceeds the accumulated depreciation. 
D)  Sale of equipment where the accumulated depreciation exceeds the gain realized. 
E)  None of the choices are correct. 
A)  Sale of equipment held for less than a year. 
B)  Sale of inventory. 
C)  Sale of equipment where the gain realized exceeds the accumulated depreciation. 
D)  Sale of equipment where the accumulated depreciation exceeds the gain realized. 
E)  None of the choices are correct. C

Question 3

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Accepted Answer

$10,000 ordinary and $40,000 §1231 gain.
For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Question 4

Which of the following sections recaptures or recharacterizes only corporate taxpayer's 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 5

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.

Accepted Answer

A)  $3,000 ordinary loss, $0 §1231 loss. 
B)  $7,000 ordinary gain, $10,000 §1231 loss. 
C)  $7,000 ordinary loss, $4,000 §1231 gain. 
D)  $1,000 ordinary gain, $4,000 §1231 loss. 
E)  None of the choices are correct. 
A)  $3,000 ordinary loss, $0 §1231 loss. 
B)  $7,000 ordinary gain, $10,000 §1231 loss. 
C)  $7,000 ordinary loss, $4,000 §1231 gain. 
D)  $1,000 ordinary gain, $4,000 §1231 loss. 
E)  None of the choices are correct.

Question 6

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 7

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

Accepted Answer

$12,000.
The amount realized is everythi

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following transactions results solely in §1245 gain?

Accepted Answer

A)  Sale of machinery held for less than one year. 
B)  Sale of machinery held for more than one year and where the gain realized exceeds the accumulated depreciation. 
C)  Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized. 
D)  Sale of land held for more than one year and where the amount realized exceeds the adjusted basis. 
E)  None of the choices are correct. 
A)  Sale of machinery held for less than one year. 
B)  Sale of machinery held for more than one year and where the gain realized exceeds the accumulated depreciation. 
C)  Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized. 
D)  Sale of land held for more than one year and where the amount realized exceeds the adjusted basis. 
E)  None of the choices are correct.

Question 10

Reid had a business building destroyed in a fire. The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

Accepted Answer

$85,000 realized gain and $10,000 recogn

Question 11

Andrea sold a piece of machinery she used in her business for 9 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

Question 12

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

Accepted Answer

A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of the choices can be considered as boot. 
A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of the choices can be considered as boot.

Question 13

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?

Accepted Answer

Capital gain of $55,000.
The $

Question 14

Realized gains are recognized unless there is specific exception.

Accepted Answer

A) True 
 B)False

Question 15

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' tax adjusted basis for the computer?

Accepted Answer

$1,200.
The adjusted

Question 16

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 17

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Accepted Answer

A)  The like-kind property to be received must be identified within 45 days. 
B)  The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer's taxable year. 
C)  The like-kind property to be received must be identified within 180 days. 
D)  There is no deadline for the identification of replacement property. 
E)  All of the choices are correct. 
A)  The like-kind property to be received must be identified within 45 days. 
B)  The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer's taxable year. 
C)  The like-kind property to be received must be identified within 180 days. 
D)  There is no deadline for the identification of replacement property. 
E)  All of the choices are correct.

Question 18

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Accepted Answer

A)  $40,000 ordinary and $360,000 §1231 gain. 
B)  $200,000 ordinary and $200,000 §1231 gain. 
C)  $400,000 ordinary gain. 
D)  $400,000 capital gain. 
E)  None of the choices are correct. 
A)  $40,000 ordinary and $360,000 §1231 gain. 
B)  $200,000 ordinary and $200,000 §1231 gain. 
C)  $400,000 ordinary gain. 
D)  $400,000 capital gain. 
E)  None of the choices are correct.

Question 19

Each of the following is True except for:

Accepted Answer

A)  a direct involuntary conversion occurs when property taken under imminent domain is replaced with other property. 
B)  qualified replacement property rules are more restrictive than the like-kind property rules. 
C)  an indirect involuntary conversion occurs when property is destroyed and insurance proceeds are used to purchase qualified replacement property. 
D)  losses realized in involuntary conversions are deferred. 
E)  all of the choices are True. 
A)  a direct involuntary conversion occurs when property taken under imminent domain is replaced with other property. 
B)  qualified replacement property rules are more restrictive than the like-kind property rules. 
C)  an indirect involuntary conversion occurs when property is destroyed and insurance proceeds are used to purchase qualified replacement property. 
D)  losses realized in involuntary conversions are deferred. 
E)  all of the choices are True.

Question 20

Which of the following may qualify as an installment sale?

Accepted Answer

A)  Sale of inventory at a gain. 
B)  Sale of securities. 
C)  Sale of asset used in a business at a gain. 
D)  Land sold at a loss. 
E)  All of the choices qualify for installment sale treatment. 
A)  Sale of inventory at a gain. 
B)  Sale of securities. 
C)  Sale of asset used in a business at a gain. 
D)  Land sold at a loss. 
E)  All of the choices qualify for installment sale treatment.

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

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

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

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

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?

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

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

Which of the following transactions results solely in §1245 gain?

Andrea sold a piece of machinery she used in her business for 9 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?

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

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?

Realized gains are recognized unless there is specific exception.

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' tax adjusted basis for the computer?

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?

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Each of the following is True except for:

Which of the following may qualify as an installment sale?

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 Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 11: Property Dispositions

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

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

Buzz Corporation sold an office building that it used in its business for $500,000. Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Buzz's gain or loss?

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

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?

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

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

Which of the following transactions results solely in §1245 gain?

Andrea sold a piece of machinery she used in her business for 9 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?

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

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?

Realized gains are recognized unless there is specific exception.

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' tax adjusted basis for the computer?

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?

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Each of the following is True except for:

Which of the following may qualify as an installment sale?

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 Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters