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Exam 10: Property Dispositions

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Question 41

Multiple Choice

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Which of the following is not an involuntary conversion?

A) Destruction caused by a hurricane.
B) Imminent domain.
C) A foreclosure.
D) Fire damage.
E) All of these are involuntary conversions.

F) B) and D)
G) All of the above

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Question 42

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Only accelerated depreciation is recaptured for §1245 assets.

A) True
B) False

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Question 43

Multiple Choice

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

Leesburg sold a machine for $2,200 on November 10th 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 §1231 look-back rule applies whether there is a net gain or loss.

Which of the following is not true regarding installment sales?

Sunshine LLC sold furniture for $75,000. Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine. What is the amount and character of Sunshine's gain or loss?

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Which of the following realized gains results in a recognized gain?

A parcel of land is always a capital asset.

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

Which one of the following is not a requirement of a deferred like-kind exchange?

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

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 which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

Which of the following is not usually included in an asset's tax basis?

Frederique sold furniture that she uses in her business for $15,000. Frederique bought the furniture a few years ago for $40,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Frederique's gain or loss?

What is the primary purpose of a third-party intermediary in a deferred like-kind exchange?

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment for $15,000 and it had an adjusted basis of $11,000 at the time of the exchange. Misha also received a used copier worth $2,000 in the transaction. What is Misha's adjusted basis in the new equipment after the exchange?

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

Which of the following is true regarding disallowed losses between related taxpayers?