Question 1

Which of the following is not an involuntary conversion?

Accepted Answer

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

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Luke sold land valued at $210,000. His original basis in the land was $180,000. For the land, Luke received $60,000 in cash in the current year and a note providing $150,000 in the subsequent year. What is Luke's recognized gain in the current and subsequent year, respectively?

Accepted Answer

$8,571 gain recognized in the current ye

Question 4

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?

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

The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss?

Accepted Answer

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

Question 6

Which one of the following is not True regarding a like-kind exchange?

Accepted Answer

A)  Loss on like-kind property is not recognized. 
B)  Gains on boot given are deferred. 
C)  Losses on boot given are not recognized. 
D)  Land can be like-kind with a building. 
E)  All of the choices are True. 
A)  Loss on like-kind property is not recognized. 
B)  Gains on boot given are deferred. 
C)  Losses on boot given are not recognized. 
D)  Land can be like-kind with a building. 
E)  All of the choices are True.

Question 7

Which of the following does not ultimately result in a capital gain or loss?

Accepted Answer

A)  Sale of a personal use asset. 
B)  Sale of inventory. 
C)  Gain on equipment used in a trade or business held for more than one year, if it is the only asset sale during the year. 
D)  Sale of capital stock in another company. 
E)  None of the choices are correct. 
A)  Sale of a personal use asset. 
B)  Sale of inventory. 
C)  Gain on equipment used in a trade or business held for more than one year, if it is the only asset sale during the year. 
D)  Sale of capital stock in another company. 
E)  None of the choices are correct.

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

Generally, the amount realized is everything of value received in a sale less selling expenses.

Accepted Answer

A) True 
 B)False

Question 10

Suzanne, an individual, began business four years ago and has never sold a §1231 asset. Suzanne owned each of the assets for several years. In the current year, Suzanne sold the following business assets:
   
Assuming Suzanne's marginal ordinary income tax rate is 32 percent, what is the character of the gains and losses and what affect do they have on Suzanne's tax liability?

Accepted Answer

$6,000 ordinary gain, $12,000 unrecaptur

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

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

Accepted Answer

A)  $25,000 §1231 gain. 
B)  $20,000 ordinary gain, and $5,000 §1231 gain. 
C)  $5,000 ordinary gain, and $20,000 §1231 gain. 
D)  $25,000 capital gain. 
E)  None of the choices are correct. 
A)  $25,000 §1231 gain. 
B)  $20,000 ordinary gain, and $5,000 §1231 gain. 
C)  $5,000 ordinary gain, and $20,000 §1231 gain. 
D)  $25,000 capital gain. 
E)  None of the choices are correct.

Question 13

§1231 assets include all assets used in a trade or business.

Accepted Answer

A) True 
 B)False

Question 14

§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 15

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 16

Mary exchanged an office building used in her business for some land. Mary originally purchased the building for $45,000 and it had an adjusted basis of $20,000 at the time of the exchange. The land had a fair market value of $40,000. Mary also gave $4,000 to the  in the transaction. What is Mary's adjusted basis in the land after the exchange?

Accepted Answer

A)  $20,000. 
B)  $24,000. 
C)  $36,000. 
D)  $40,000. 
E)  None of the choices are correct. 
A)  $20,000. 
B)  $24,000. 
C)  $36,000. 
D)  $40,000. 
E)  None of the choices are correct.

Question 17

Odintz traded land for land. Odintz originally purchased its land for $150,000. The land received was purchased for $200,000 and was subject to a mortgage of $50,000 that was paid off before the transfer. The fair market value of the new land is $240,000. What is Odintz's adjusted basis in the new land after the exchange?

Accepted Answer

$150,000.
The exchange qualifi

Question 18

All tax gains and losses are ultimately characterized as either ordinary or capital.

Accepted Answer

A) True 
 B)False

Question 19

What is the primary purpose of a third-party intermediary in a deferred like-kind exchange?

Accepted Answer

A)  To facilitate finding replacement property. 
B)  To help acquire the replacement property. 
C)  To prevent the seller from receiving cash (boot) that will taint the transaction. 
D)  To certify the taxpayer's Form 8824. 
E)  All of the choices are correct. 
A)  To facilitate finding replacement property. 
B)  To help acquire the replacement property. 
C)  To prevent the seller from receiving cash (boot) that will taint the transaction. 
D)  To certify the taxpayer's Form 8824. 
E)  All of the choices are correct.

Question 20

Unrecaptured §1250 gains apply only to individuals.

Accepted Answer

A) True 
 B)False

Which of the following is not an involuntary conversion?

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

Luke sold land valued at $210,000. His original basis in the land was $180,000. For the land, Luke received $60,000 in cash in the current year and a note providing $150,000 in the subsequent year. What is Luke's recognized gain in the current and subsequent year, respectively?

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?

The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss?

Which one of the following is not True regarding a like-kind exchange?

Which of the following does not ultimately result in a capital gain or loss?

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

Generally, the amount realized is everything of value received in a sale less selling expenses.

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

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

§1231 assets include all assets used in a trade or business.

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

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

All tax gains and losses are ultimately characterized as either ordinary or capital.

What is the primary purpose of a third-party intermediary in a deferred like-kind exchange?

Unrecaptured §1250 gains apply only to individuals.

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

Which of the following is not an involuntary conversion?

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

Luke sold land valued at $210,000. His original basis in the land was $180,000. For the land, Luke received $60,000 in cash in the current year and a note providing $150,000 in the subsequent year. What is Luke's recognized gain in the current and subsequent year, respectively?

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?

The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss?

Which one of the following is not True regarding a like-kind exchange?

Which of the following does not ultimately result in a capital gain or loss?

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

Generally, the amount realized is everything of value received in a sale less selling expenses.

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

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

§1231 assets include all assets used in a trade or business.

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

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

All tax gains and losses are ultimately characterized as either ordinary or capital.

What is the primary purpose of a third-party intermediary in a deferred like-kind exchange?

Unrecaptured §1250 gains apply only to individuals.

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