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Exam 11: Property Dispositions

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Question 31

True/False

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Depreciation recapture changes both the amount and character of a gain.

A) True
B) False

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Question 32

Multiple Choice

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Butte sold a machine to a machine dealer for $51,600. Butte bought the machine for $53,400 several years ago and has claimed $11,700 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

A) $9,900 §1231 loss.
B) $1,800 §1231 loss.
C) $9,900 ordinary gain.
D) $9,900 capital gain.
E) None of the choices are correct.

F) B) and D)
G) B) and E)

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Question 33

Multiple Choice

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Which of the following is not true regarding §1239?

Silver sold machinerythat it used in its business to Gold, a related entity, for $54,700. Silver bought the equipment a few years ago for $50,300 and has claimed $14,700 of depreciation expense. What is the amount and character of Silver's gain?

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?

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

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

Unrecaptured §1250 gains apply only to individuals.

Koch traded Machine 1 for Machine 2when the fair market value of both machines was $50,000. 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?

Jessie sold a piece of land held for investment for $251,400. Jessie bought the land two years ago for $181,700. What is the amount and character of Jessie's gain?

Brad sold a rental house that he owned for $245,500. Brad bought the rental house five years ago for $229,500 and has claimed $47,750 of depreciation expense. What is the amount and character of Brad's gain or loss?

Which of the following does not ultimately result in a capital gain or loss?

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

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

Alexandra sold equipment that she uses in her business for $101,400. Alexandra bought the equipment two years ago for $90,700 and has claimed $12,050 of depreciation expense. What is the amount and character of Alexandra's gain or loss?

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

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

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?

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?