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

Question 2

Which one of the following is not considered boot in a like-kind exchange?

Accepted Answer

A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of these. 
A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of these.

Question 3

Reid had a business building destroyed in a fire. The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

Accepted Answer

$85,000 realized gai

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Accepted Answer

A)  $9,500 §1221. 
B)  $9,500 §1231. 
C)  $9,500 §1245. 
D)  $9,500 §1250. 
E)  None of these. 
A)  $9,500 §1221. 
B)  $9,500 §1231. 
C)  $9,500 §1245. 
D)  $9,500 §1250. 
E)  None of these.

Question 6

Only accelerated depreciation is recaptured for §1245 assets.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  The like-kind property to be received must be identified within 45 days. 
B)  The exchange must be completed within the taxable year. 
C)  The like-kind property must be received within 180 days. 
D)  A third party intermediary is often used to facilitate the exchange. 
E)  All of these. 
A)  The like-kind property to be received must be identified within 45 days. 
B)  The exchange must be completed within the taxable year. 
C)  The like-kind property must be received within 180 days. 
D)  A third party intermediary is often used to facilitate the exchange. 
E)  All of these.

Question 8

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Accepted Answer

A)  $800 gain. 
B)  $1,000 gain. 
C)  $1,200 loss. 
D)  $1,400 loss. 
E)  None of these. 
A)  $800 gain. 
B)  $1,000 gain. 
C)  $1,200 loss. 
D)  $1,400 loss. 
E)  None of these.

Question 9

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 related person begins over. 
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 these. 
A)  The tax laws essentially treat related parties as the same taxpayer. 
B)  The holding period of the related person begins over. 
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 these.

Question 10

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

The answer of Misha traded computer equipment used in her...

Question 11

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 12

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

Accepted Answer

A)  §1239. 
B)  §1244. 
C)  §1245. 
D)  §291. 
E)  None of these. 
A)  §1239. 
B)  §1244. 
C)  §1245. 
D)  §291. 
E)  None of these.

Question 13

Which of the following is not true regarding installment sales?

Accepted Answer

A)  Only gains are eligible for installment sale reporting. 
B)  Depreciation recapture is deferred in an installment sale. 
C)  The gross profit percentage is needed to determine the annual gain recognized. 
D)  Stock sales are ineligible for installment sale treatment. 
E)  None of these. 
A)  Only gains are eligible for installment sale reporting. 
B)  Depreciation recapture is deferred in an installment sale. 
C)  The gross profit percentage is needed to determine the annual gain recognized. 
D)  Stock sales are ineligible for installment sale treatment. 
E)  None of these.

Question 14

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 these. 
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 these.

Question 15

Frederique sold furniture that she uses in her business for $15,000. Frederique bought the furniture a few years ago for $40,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Frederique's gain or loss?

Accepted Answer

The answer of Frederique sold furniture that she uses in...

Question 16

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 these 
A)  Purchase price 
B)  Sales tax 
C)  Shipping costs 
D)  Installation costs 
E)  None of these

Question 17

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

Accepted Answer

A)  Tax adjusted basis is usually greater than book adjusted basis. 
B)  Tax adjusted basis is usually less than book adjusted basis. 
C)  Adjusted basis is cost basis less cost recovery deductions. 
D)  Tax adjusted basis may change over time. 
A)  Tax adjusted basis is usually greater than book adjusted basis. 
B)  Tax adjusted basis is usually less than book adjusted basis. 
C)  Adjusted basis is cost basis less cost recovery deductions. 
D)  Tax adjusted basis may change over time.

Question 18

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 or

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 these. 
A)  Capital. 
B)  Ordinary. 
C)  §1231. 
D)  §1245. 
E)  None of these.

Question 20

A parcel of land is always a capital asset.

Accepted Answer

A) True 
 B)False

Exam 10: Property Dispositions

Which of the following is not an involuntary conversion?

Which one of the following is not considered boot in a like-kind exchange?

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

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Only accelerated depreciation is recaptured for §1245 assets.

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

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

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

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

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

Which of the following is not true regarding installment sales?

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

Frederique sold furniture that she uses in her business for $15,000. Frederique bought the furniture a few years ago for $40,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Frederique's gain or loss?

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

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

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

A parcel of land is always a capital asset.

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

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters