Question 1

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.Gain or loss realized is simply the amount realized less adjusted basis. 
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.Gain or loss realized is simply the amount realized less adjusted basis.

Question 2

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

Accepted Answer

A) True 
 B)False

Question 3

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.For corporate taxpayers only,§291 recaptures 20% of the lesser of gain realized or accumulated depreciation on real property. 
A) §291. 
B) §1239. 
C) §1245. 
D) Unrecaptured §1250 gains. 
E) None of thesE.For corporate taxpayers only,§291 recaptures 20% of the lesser of gain realized or accumulated depreciation on real property.

Question 4

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Accepted Answer

A) True 
 B)False

Question 5

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 6

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 equipment 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 thesE.§1239 recharacterizes the entire gain as ordinary income when depreciable property is sold to a related party. 
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 thesE.§1239 recharacterizes the entire gain as ordinary income when depreciable property is sold to a related party.

Question 7

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) §1239. 
B) §1244. 
C) §1245. 
D) §1250. 
E) None of thesE.§1250 no longer applies since straight line depreciation is used for real property. 
A) §1239. 
B) §1244. 
C) §1245. 
D) §1250. 
E) None of thesE.§1250 no longer applies since straight line depreciation is used for real property.

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

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

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

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Accounts receivable and inventory are examples of ordinary assets.

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 equipment 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?

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

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

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Exam 10: Property Dispositions

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

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

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

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Accounts receivable and inventory are examples of ordinary assets.

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 equipment 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?

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

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

Filters