Question 1

A deferred like-kind exchange does not help accomplish which of the following objectives?

Accepted Answer

A)  To facilitate finding replacement property.
B)  To help acquire the replacement property.
C)  To reduce the possibility that the seller must receive cash (boot) that will taint the transaction.
D)  To certify the taxpayer's Form 8824-Like-kind exchanges.
E)  All of the choices are correct.F) A) and D)
G) C) and D)

Question 2

Generally, the amount realized is everything of value received in a sale less selling expenses.

Accepted Answer

A) True 
 B)False

Question 3

Why does §1250 recapture generally no longer apply?

Accepted Answer

A)  Congress repealed the code section.
B)  Real property is depreciated using the straight-line method after 1986.
C)  §1245 recapture trumps §1250 recapture.
D)  Because unrecaptured §1250 gains now apply to all taxpayers instead.
E)  None of the choices are correct.F) A) and D)
G) A) and B)

Question 4

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 the choices are correct.F) B) and D)
G) A) and B)

Question 5

The sale for more than the original cost basis (before depreciation) of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

Accepted Answer

A)  Capital and ordinary.
B)  Ordinary only.
C)  Capital and §1231.
D)  §1245 and §1231.
E)  None of the choices are correct.F) B) and D)
G) All of the above

Question 6

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Accepted Answer

$10,000 §1231 gain and $25,000 unrecaptu...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Boot is not like-kind property involved in a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 9

Brandon, an individual, began business four years ago and has never sold a §1231 asset. Brandon owned each of the assets for several years. In the current year, Brandon sold the following business assets:  Assuming Brandon's marginal ordinary income tax rate is 32 percent, what effect do the gains and losses have on Brandon's tax liability?

Accepted Answer

A)  $7,000 ordinary income, $1,000 §1231 loss, and $1,920 tax liability.
B)  $6,000 ordinary income and $1,920 tax liability.
C)  $7,000 §1231 gain and $2,240 tax liability.
D)  $7,000 §1231 gain and $1,050 tax liability.
E)  None of the choices are correct.F) A) and C)
G) B) and C)

Question 10

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 11

Andrea sold a piece of machinery she used in her business for nine months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Accepted Answer

$5,000 ordinary loss.
The real...

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

Gainesville LLC sold the following business assets during the current year: (1)machinery, $20,000 cost basis, $4,000 depreciation, $22,000 proceeds; (2)automobile, $15,000 cost basis, $12,000 depreciation, $7,000 proceeds; (3)equipment, $15,000 cost basis, $10,000 depreciation, $4,000 proceeds; (4)computer equipment, $35,000 cost basis, $16,000 depreciation, $15,000 proceeds; (5)Winchester had unrecaptured §1231 losses of $5,000 in the prior five years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?

Accepted Answer

$8,000 ordinary gain and $3,000 §1231 lo...

Question 14

Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Accepted Answer

A)  $25,000 ordinary and $50,000 unrecaptured §1250 gain.
B)  $25,000 §1231 gain and $50,000 unrecaptured §1250 gain.
C)  $75,000 ordinary gain.
D)  $75,000 capital gain.
E)  None of the choices are correct.F) A) and B)
G) B) and E)

Question 15

Silver sold machinery that it used in its business to Gold, a related entity, for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Accepted Answer

$20,000 of ordinary income und...

Question 16

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 that 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 gain and $10,000 recogn...

Question 17

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

Accepted Answer

The sale at a loss of a machine used in ...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago. Sarah had purchased the stock for $20,000 several years earlier. What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

Accepted Answer

$3,000 long-term capital loss if sold fo...

Question 20

Which one of the following is not true regarding a like-kind exchange?

Accepted Answer

A)  Loss on like-kind property is not recognized.
B)  Gains on boot given are deferred.
C)  Losses on boot given are not recognized.
D)  Land can be like-kind with a building.
E)  All of the choices are true.F) None of the above
G) C) and D)

Exam 11: Property Dispositions

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?

Correct Answer
verified
$8,571 gain recognized in the current ye...
View Answer

Andrea sold a piece of machinery she used in her business for nine months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Correct Answer
verified
$5,000 ordinary loss.
The real...
View Answer

Correct Answer
verified
$85,000 realized gain and $10,000 recogn...
View Answer

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

Correct Answer
verified

Correct Answer
verified
$8,000 ordinary gain and $3,000 §1231 lo...
View Answer

Generally, the amount realized is everything of value received in a sale less selling expenses.

Correct Answer
verified

Silver sold machinery that it used in its business to Gold, a related entity, for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Correct Answer
verified
$20,000 of ordinary income und...
View Answer

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

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
The sale at a loss of a machine used in ...
View Answer

A deferred like-kind exchange does not help accomplish which of the following objectives?

Correct Answer
verified

Boot is not like-kind property involved in a like-kind exchange.

Correct Answer
verified

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Correct Answer
verified
$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

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

Correct Answer
verified

Which one of the following is not true regarding a like-kind exchange?

Correct Answer
verified

Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Correct Answer
verified

Why does §1250 recapture generally no longer apply?

Correct Answer
verified

The sale for more than the original cost basis (before depreciation) of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

Correct Answer
verified

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago. Sarah had purchased the stock for $20,000 several years earlier. What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

Correct Answer
verified
$3,000 long-term capital loss if sold fo...
View Answer

Exam 11: Property Dispositions

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?

Correct Answerverified$8,571 gain recognized in the current ye...View AnswerShow Answer

Andrea sold a piece of machinery she used in her business for nine months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Correct Answerverified$5,000 ordinary loss.The real...View AnswerShow Answer

Correct Answerverified$85,000 realized gain and $10,000 recogn...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverified$8,000 ordinary gain and $3,000 §1231 lo...View AnswerShow Answer

Generally, the amount realized is everything of value received in a sale less selling expenses.

Correct AnswerverifiedShow Answer

Silver sold machinery that it used in its business to Gold, a related entity, for $55,000. Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense. What is the amount and character of Silver's gain?

Correct Answerverified$20,000 of ordinary income und...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe sale at a loss of a machine used in ...View AnswerShow Answer

A deferred like-kind exchange does not help accomplish which of the following objectives?

Correct AnswerverifiedShow Answer

Boot is not like-kind property involved in a like-kind exchange.

Correct AnswerverifiedShow Answer

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Correct Answerverified$10,000 §1231 gain and $25,000 unrecaptu...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is not true regarding a like-kind exchange?

Correct AnswerverifiedShow Answer

Brad sold a rental house that he owned for $250,000. Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense. What is the amount and character of Brad's gain or loss?

Correct AnswerverifiedShow Answer

Why does §1250 recapture generally no longer apply?

Correct AnswerverifiedShow Answer

The sale for more than the original cost basis (before depreciation) of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

Correct AnswerverifiedShow Answer

Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago. Sarah had purchased the stock for $20,000 several years earlier. What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

Correct Answerverified$3,000 long-term capital loss if sold fo...View AnswerShow Answer

Correct Answer
verified
$8,571 gain recognized in the current ye...
View Answer

Correct Answer
verified
$5,000 ordinary loss.
The real...
View Answer

Correct Answer
verified
$85,000 realized gain and $10,000 recogn...
View Answer

Correct Answer
verified

Correct Answer
verified
$8,000 ordinary gain and $3,000 §1231 lo...
View Answer

Correct Answer
verified

Correct Answer
verified
$20,000 of ordinary income und...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The sale at a loss of a machine used in ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$3,000 long-term capital loss if sold fo...
View Answer