Question 1

Which of the following is NOT a §1245 asset if held for more than one year?

Accepted Answer

A)  Machinery. 
B)  Automobile. 
C)  Business cell phone. 
D)  Land. 
E)  None of the choices are correct. 
A)  Machinery. 
B)  Automobile. 
C)  Business cell phone. 
D)  Land. 
E)  None of the choices are correct.

Question 2

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 3

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

Accepted Answer

$10,000 ordinary gain.
§1245 r

Question 4

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 35 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 unrecapture

Question 5

The gain or loss realized on the sale of an asset is always recognized for tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

Redoubt LLC traded machinery used in its business to a machinery dealer for some new machinery.Redoubt originally purchased the machinery for $80,000 and it had an adjusted basis of $53,000 at the time of the exchange.The new machinery had a fair market value of $62,000.Redoubt also received $7,000 of computer equipment in the transaction.What is Redoubt's gain or loss recognized on the exchange?

Accepted Answer

$7,000 gain.
The gain recognized is the

Question 7

Which of the following is true regarding the §1231 look-back rule?

Accepted Answer

A)  It only applies when a §1231 loss occurs. 
B)  It only applies when a §1231 gain occurs. 
C)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years. 
D)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years. 
E)  None of the choices are correct. 
A)  It only applies when a §1231 loss occurs. 
B)  It only applies when a §1231 gain occurs. 
C)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years. 
D)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years. 
E)  None of the choices are correct.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true regarding depreciation recapture?

Accepted Answer

A)  Changes the character of a loss. 
B)  Changes the character of a gain. 
C)  Changes the amount of a gain. 
D)  Only applies to ordinary assets. 
E)  None of the choices are correct. 
A)  Changes the character of a loss. 
B)  Changes the character of a gain. 
C)  Changes the amount of a gain. 
D)  Only applies to ordinary assets. 
E)  None of the choices are correct.

Question 10

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 11

Silver sold machinery to Gold,a related entity,which it used in its business for $55,000.Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense.What is the amount and character of Silver's gain?

Accepted Answer

$20,000 of ordinary income und

Question 12

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 13

A parcel of land is always a capital asset.

Accepted Answer

A) True 
 B)False

Question 14

Losses on sales between related parties are realized but not recognized.

Accepted Answer

A) True 
 B)False

Question 15

For corporations,§291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

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 $

Which of the following is NOT a §1245 asset if held for more than one year?

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

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

The gain or loss realized on the sale of an asset is always recognized for tax purposes.

Which of the following is true regarding the §1231 look-back rule?

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

Which of the following is true regarding depreciation recapture?

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

Silver sold machinery to Gold,a related entity,which it used in its business for $55,000.Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense.What is the amount and character of Silver's gain?

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?

A parcel of land is always a capital asset.

Losses on sales between related parties are realized but not recognized.

For corporations,§291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

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

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

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

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?

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?

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

Which of the following is NOT a §1245 asset if held for more than one year?

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

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

The gain or loss realized on the sale of an asset is always recognized for tax purposes.

Which of the following is true regarding the §1231 look-back rule?

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

Which of the following is true regarding depreciation recapture?

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

Silver sold machinery to Gold,a related entity,which it used in its business for $55,000.Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense.What is the amount and character of Silver's gain?

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?

A parcel of land is always a capital asset.

Losses on sales between related parties are realized but not recognized.

For corporations,§291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

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

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

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

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?

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?

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