Exam 10: Property Dispositions

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 1^st of the current year.On May 10^th,with the help of a commercial real estate agent,Tyson identified two suitable warehouses.On August 10^th he made an offer on the first building which was rejected.On August 13^th an offer was accepted on the second warehouse.On September 23^rd 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?

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

Which of the following is true regarding depreciation recapture?

Leesburg sold a machine for $2,200 on November 10^th 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?

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

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?

Unrecaptured §1250 gain is taxed at a maximum rate of 25 percent.

§1231 assets include all assets used in a trade or business.

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

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

Which of the following may qualify as an installment sale?

Unrecaptured §1250 gains apply only to individuals.

Which of the following is not true regarding installment sales?

Only accelerated depreciation is recaptured for §1245 assets.

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?

A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

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.

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

Residential real property is not like-kind with non-residential real property.

§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.