Question 1

Assets held for investment and personal use assets are examples of capital assets.

Accepted Answer

A) True 
 B)False

Question 2

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.

Question 3

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 4

Which of the following is not true regarding §1239?

Accepted Answer

A)  It only applies to related taxpayers. 
B)  It only applies to gains on sales of depreciable property. 
C)  It only applies to gains on sales of non-residential real property. 
D)  It does not apply to losses. 
E)  None of the choices are correct. 
A)  It only applies to related taxpayers. 
B)  It only applies to gains on sales of depreciable property. 
C)  It only applies to gains on sales of non-residential real property. 
D)  It does not apply to losses. 
E)  None of the choices are correct.

Question 5

Which of the following is true regarding disallowed losses between related taxpayers?

Accepted Answer

A)  The tax laws essentially treat related parties as the same taxpayer. 
B)  The holding period of the seller carries over to the buyer. 
C)  The related person always receives a carryover basis. 
D)  The seller's realized loss is deferred until the buyer sells the assets. 
E)  None of the choices are correct. 
A)  The tax laws essentially treat related parties as the same taxpayer. 
B)  The holding period of the seller carries over to the buyer. 
C)  The related person always receives a carryover basis. 
D)  The seller's realized loss is deferred until the buyer sells the assets. 
E)  None of the choices are correct.

Question 6

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 i

Question 7

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 8

Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

Accepted Answer

A) True 
 B)False

Question 9

Boot is not like-kind property involved in a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  Farm machinery traded for farm machinery. 
B)  Sale to a related party. 
C)  Involuntary conversion. 
D)  Iowa cropland exchanged for a Minnesota warehouse. 
A)  Farm machinery traded for farm machinery. 
B)  Sale to a related party. 
C)  Involuntary conversion. 
D)  Iowa cropland exchanged for a Minnesota warehouse.

Question 11

In a deferred like-kind exchange the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial exchange.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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.

Question 14

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 15

Gainesville LLC sold the following business assets during the current year: (1)machinery,$20,000 cost basis,$4,000 depreciation,proceeds $22,000; (2)automobile,$15,000 cost basis,$12,000 depreciation,proceeds $7,000; (3)equipment,$15,000 cost basis,$10,000 depreciation,proceeds $4,000; (4)computer equipment,$35,000 cost basis,$16,000 depreciation,proceeds $15,000; (5)Winchester had unrecaptured §1231 losses of $5,000 in the prior 5 years.What is the amount and character of Winchester's gains and losses before the 1231 netting process?

Accepted Answer

$8,000 ordinary gain and $3,000 §1231 lo

Question 16

The §1231 look-back rule applies whether there is a net gain or loss.

Accepted Answer

A) True 
 B)False

Question 17

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.

Question 18

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

Accepted Answer

A)  $7,500 §1231 loss. 
B)  $5,000 §1231 loss. 
C)  $7,500 ordinary gain. 
D)  $7,500 capital gain. 
E)  None of the choices are correct. 
A)  $7,500 §1231 loss. 
B)  $5,000 §1231 loss. 
C)  $7,500 ordinary gain. 
D)  $7,500 capital gain. 
E)  None of the choices are correct.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

What is the character of land used in an active trade or business for two years?

Accepted Answer

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

Assets held for investment and personal use assets are examples of capital assets.

Which of the following may qualify as an installment sale?

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?

Which of the following is not true regarding §1239?

Which of the following is true regarding disallowed losses between related taxpayers?

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?

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

Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

Boot is not like-kind property involved in a like-kind exchange.

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

In a deferred like-kind exchange the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial 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?

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

The §1231 look-back rule applies whether there is a net gain or loss.

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

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

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

What is the character of land used in an active trade or business for two years?

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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

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Exam 11: Property Dispositions

Assets held for investment and personal use assets are examples of capital assets.

Which of the following may qualify as an installment sale?

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?

Which of the following is not true regarding §1239?

Which of the following is true regarding disallowed losses between related taxpayers?

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?

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

Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

Boot is not like-kind property involved in a like-kind exchange.

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

In a deferred like-kind exchange the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial 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?

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

The §1231 look-back rule applies whether there is a net gain or loss.

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

Butte sold a machine to a machine dealer for $50,000.Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine.What is the amount and character of Butte's gain or loss?

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

What is the character of land used in an active trade or business for two years?

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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