Question 1

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 2

Mary traded furniture used in her business to a furniture dealer for some new furniture.Mary originally purchased the furniture for $45,000 and it had an adjusted basis of $20,000 at the time of the exchange.The new furniture had a fair market value of $40,000.Mary also gave $4,000 to the dealer in the transaction.What is Mary's adjusted basis in the new furniture 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 3

The adjusted basis is the cost basis less cost recovery deductions.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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.

Question 7

Tyson had a parcel of undeveloped investment land that he wanted to trade for a warehouse to be used in his business.He found a buyer willing to pay him $450,000 for the land.He transferred the land to a third party intermediary on April 1st of the current year.On May 10th,with the help of a commercial real estate agent,Tyson identified two suitable warehouses.On August 10th he made an offer on the first building which was rejected.On August 13th an offer was accepted on the second warehouse.On September 23rd the third party intermediary transferred $500,000 ($450,000 from the original property plus $50,000 from Tyson)to the seller and conveyed title to the warehouse to Tyson.Explain whether the exchange of property qualifies as a like-kind exchange.

Accepted Answer

Yes,the exchange of property qualifies a

Question 8

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 §

Question 9

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

Question 10

Ashburn reported a $105,000 net §1231 gain in year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during years 1-5,what amount of Ashburn's net §1231 gain for year 6,if any,is treated as ordinary income?

Accepted Answer

A)  $0. 
B)  $45,000. 
C)  $60,000. 
D)  $105,000. 
E)  None of the choices are correct. 
A)  $0. 
B)  $45,000. 
C)  $60,000. 
D)  $105,000. 
E)  None of the choices are correct.

Question 11

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

Accepted Answer

A)  $20,000 ordinary income under §1239. 
B)  $10,000 ordinary gain and $10,000 §1231 gain. 
C)  $20,000 ordinary gain. 
D)  $20,000 capital gain. 
E)  None of the choices are correct. 
A)  $20,000 ordinary income under §1239. 
B)  $10,000 ordinary gain and $10,000 §1231 gain. 
C)  $20,000 ordinary gain. 
D)  $20,000 capital gain. 
E)  None of the choices are correct.

Question 12

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

Only accelerated depreciation is recaptured for §1245 assets.

Accepted Answer

A) True 
 B)False

Question 15

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment.Misha originally purchased the computer equipment for $15,000 and it had an adjusted basis of $11,000 at the time of the exchange.Misha also received a used copier worth $2,000 in the transaction.What is Misha's adjusted basis in the new equipment after the exchange?

Accepted Answer

$11,000.
The like-kind property receives

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

An installment sale is any sale where at least a portion of the sales proceeds is received in a subsequent taxable year.

Accepted Answer

A) True 
 B)False

Question 19

The sale of computer equipment used in a trade or business for 9 months 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 20

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

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 adjusted basis is the cost basis less cost recovery deductions.

Which of the following is NOT true regarding §1239?

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

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 is NOT an involuntary conversion?

Ashburn reported a $105,000 net §1231 gain in year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during years 1-5,what amount of Ashburn's net §1231 gain for year 6,if any,is treated as ordinary income?

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

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

Only accelerated depreciation is recaptured for §1245 assets.

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

Which of the following may qualify as an installment sale?

An installment sale is any sale where at least a portion of the sales proceeds is received in a subsequent taxable year.

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

Manassas purchased a computer several years ago for $2,200.On November 10^th 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?

Business Income,Deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 3: Property Dispositions

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 adjusted basis is the cost basis less cost recovery deductions.

Which of the following is NOT true regarding §1239?

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

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 is NOT an involuntary conversion?

Ashburn reported a $105,000 net §1231 gain in year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during years 1-5,what amount of Ashburn's net §1231 gain for year 6,if any,is treated as ordinary income?

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

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

Only accelerated depreciation is recaptured for §1245 assets.

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

Which of the following may qualify as an installment sale?

An installment sale is any sale where at least a portion of the sales proceeds is received in a subsequent taxable year.

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

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?

Business Income,Deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Manassas purchased a computer several years ago for $2,200.On November 10^th 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?