Question 1

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 these 
A)  §291. 
B)  §1239. 
C)  §1245. 
D) Unrecaptured §1250 gains. 
E) None of these

Question 2

Pelosi Corporation sold a parcel of land valued at $300,000. Its basis in the land was $250,000. For the land, Pelosi received $150,000 in cash in the current year and a note providing Pelosi with $150,000 in the subsequent year. What is Pelosi's recognized gain in the current and subsequent year, respectively?

Accepted Answer

A)  $0, $50,000. 
B)  $10,000, $40,000. 
C)  $25,000, $25,000. 
D) $50,000, $0. 
E) None of these 
A)  $0, $50,000. 
B)  $10,000, $40,000. 
C)  $25,000, $25,000. 
D) $50,000, $0. 
E) None of these

Question 3

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 these 
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 these

Question 4

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 5

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.
100 percent of the gain is recharacterized as ordinary income.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

$5,000 §1231 loss.
Explanation

Question 8

Collins Corporation, of Camden, Maine, wants to exchange its manufacturing equipment for Rockland Company's equipment. Both parties agree that Collins's machinery is worth $200,000 and that Rockland's machinery is worth $175,000. Collins will not enter into the transaction unless it qualifies as a like-kind exchange. If Collins wants to avoid gain, what could the parties do to equalize the value exchanged but still allow the exchange to qualify as a like-kind exchange?

Accepted Answer

Rockland could equalize the transaction

Question 9

Which of the following results in an ordinary gain or loss?

Accepted Answer

A)  Sale of a machine at a gain. 
B)  Sale of stock held for investment. 
C)  Sale of a §1231 asset. 
D) Sale of inventory. 
E) None of these 
A)  Sale of a machine at a gain. 
B)  Sale of stock held for investment. 
C)  Sale of a §1231 asset. 
D) Sale of inventory. 
E) None of these

Question 10

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 these 
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 these

Question 11

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

Accepted Answer

A)  Cash less selling costs. 
B)  Cost basis less cost recovery. 
C)  Cash less cost recovery. 
D) Amount realized less adjusted basis. 
E) None of these 
A)  Cash less selling costs. 
B)  Cost basis less cost recovery. 
C)  Cash less cost recovery. 
D) Amount realized less adjusted basis. 
E) None of these

Question 12

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

Accepted Answer

The sale of a machine at a loss generate

Question 13

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 these 
A)  Capital. 
B)  §291. 
C)  §1231. 
D) §1245. 
E) None of these

Question 14

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.
Expla

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.
Explanation: The like-kind prop

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 these 
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 these

Question 17

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 18

Koch traded machine 1 for machine 2. Koch originally purchased machine 1 for $75,000 and machine 1's adjusted basis was $40,000 at the time of the exchange. Machine 2's seller purchased it for $65,000 and machine 2's adjusted basis was $55,000 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

Accepted Answer

A)  $40,000. 
B)  $50,000. 
C)  $55,000. 
D) $75,000. 
E) None of these 
A)  $40,000. 
B)  $50,000. 
C)  $55,000. 
D) $75,000. 
E) None of these

Question 19

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?

Accepted Answer

A)  $10,000 §1231 loss. 
B)  $10,000 §1245 loss. 
C)  $50,000 ordinary loss. 
D) $10,000 capital loss. 
E) None of these 
A)  $10,000 §1231 loss. 
B)  $10,000 §1245 loss. 
C)  $50,000 ordinary loss. 
D) $10,000 capital loss. 
E) None of these

Question 20

Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000; (2) machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000; (3) furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000; (5) Winchester had unrecaptured §1231 losses of $3,000 in the prior 5 years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?

Accepted Answer

A)  $3,000 ordinary loss, $0 §1231 loss. 
B)  $7,000 ordinary gain, $10,000 §1231 loss. 
C)  $7,000 ordinary loss, $4,000 §1231 gain. 
D) $1,000 ordinary gain, $4,000 §1231 loss. 
E) None of these 
A)  $3,000 ordinary loss, $0 §1231 loss. 
B)  $7,000 ordinary gain, $10,000 §1231 loss. 
C)  $7,000 ordinary loss, $4,000 §1231 gain. 
D) $1,000 ordinary gain, $4,000 §1231 loss. 
E) None of these

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

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

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?

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income. 100 percent of the gain is recharacterized as ordinary income.

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

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 results in an ordinary gain or loss?

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

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

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

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?

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?

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

Accounts receivable and inventory are examples of ordinary assets.

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?

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, 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

Filters

Exam 3: Property Dispositions

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

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

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?

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income. 100 percent of the gain is recharacterized as ordinary income.

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

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 results in an ordinary gain or loss?

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

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

Explain whether the sale of a machine used in a trade or business that is sold at a loss generates an ordinary or capital loss?

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?

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?

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

Accounts receivable and inventory are examples of ordinary assets.

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?

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, 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

Filters