Exam 11: Property Dispositions

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?

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?

Sumner sold equipment that it uses in its business for $30,000.Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense.Assuming that this is Sumner's only disposition during the year,what is the amount and character of Sumner's gain or loss?

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.

A parcel of land is always a capital asset.

The §1231 look-back rule recharacterizes §1231 gains if §1231 losses have created ordinary losses in the last 5 years.

Which of the following is not true regarding installment sales?

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

Each of the following is true except for:

Which of the following is not true regarding an asset's adjusted basis?

Which one of the following is not a requirement of a deferred like-kind exchange?

A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

Arlington LLC traded machinery used in its business to a machinery dealer for some new machinery.Arlington originally purchased the machinery for $60,000 and it had an adjusted basis of $28,000 at the time of the exchange.The new machinery had a fair market value of $35,000.Arlington also received $2,000 of office equipment in the transaction.What is Arlington's gain or loss recognized on the exchange?

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Which of the following is how gain or loss realized is calculated?

Andrew,an individual,began business four years ago and has never sold a §1231 asset.Andrew owned each of the assets for several years.In the current year,Andrew sold the following business assets: Assuming Andrew's marginal ordinary income tax rate is 30 percent,what is the character of the gains and losses and what affect do they have on Andrew's tax liability?

Why does §1250 recapture generally no longer apply?

The sale of computer equipment used in a trade or business for 9 months results in the following type of gain or loss?

Which of the following sections does not recapture or recharacterize a taxpayer's gain?