FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Property Dispositions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

True/False

Review LaterAdd Note

Review Later

After application of the look-back rule,net §1231 gains become capital while net §1231 losses become ordinary.

A) True
B) False

Correct Answer

verified

Show Answer

Question 42

Essay

Review LaterAdd Note

Review Later

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?

Correct Answer

verified

Rockland could equalize the transaction ...

View Answer

Show Answer

Question 43

True/False

Review LaterAdd Note

The gain or loss realized on the sale of an asset is the amount realized less the adjusted basis.

Kristi had a business building destroyed in an earthquake.The old building was purchased for $250,000 and $80,000 of depreciation deductions had been taken.Her insurance proceeds were $550,000.Although the replacement property was much larger and nicer than her old building,Kristi's new property qualified as replacement property.She acquired the new property 13 months after the earthquake for $620,000.What is the amount of Kristi's realized gain and recognized gain and the basis in her new property?

The amount realized is the sale proceeds less the adjusted basis.

Bull Run sold a computer for $1,200 on November 10^th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

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

Unrecaptured §1250 gains apply only to individuals.

Which of the following is NOT true regarding installment sales?

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

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?

Brandon,an individual,began business four years ago and has sold §1231 assets with $5,000 of losses within the last 5 years.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 35 percent,what effect do the gains and losses have on Brandon's tax liability?

Assets held for investment and personal use assets are examples of capital assets.

In the current year,Raven sold machinery with a fair market value of $200,000.The machinery's original basis was $190,000 and Raven's accumulated depreciation on the machinery was $40,000,so its adjusted basis to Raven was $150,000.Raven received $50,000 in the current year and a note paying Raven $75,000 a year for two years beginning in next year.What is the amount and character of the gain that Raven will recognize in the current year?

Accounts receivable and inventory are examples of ordinary assets.

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

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

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?

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

Realized gains are recognized unless there is specific exception.