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Exam 11: Property Dispositions

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Question 51

Multiple Choice

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

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.

F) B) and D)
G) A) and D)

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Question 52

Multiple Choice

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

A) §291.
B) §1239.
C) §1245.
D) Unrecaptured §1250 gains.
E) None of these.

F) None of the above
G) A) and D)

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Question 53

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The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

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?

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

Redoubt LLC traded machinery used in its business to a machinery dealer for some new machinery. Redoubt originally purchased the machinery for $80,000 and it had an adjusted basis of $53,000 at the time of the exchange. The new machinery had a fair market value of $62,000. Redoubt also received $7,000 of computer equipment in the transaction. What is Redoubt's gain or loss recognized on the exchange?

The §1231 look-back rule recharacterizes §1231 gains if §1231 losses have created ordinary losses in the last 5 years.

Which of the following is not a §1245 asset if held for more than one year?

Residential real property is not like-kind with non-residential real property.

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?

Odintz traded machinery for machinery. Odintz originally purchased its machine for $150,000 and the adjusted basis was $90,000 at the time of the exchange. The machinery received was purchased for $200,000, had an adjusted basis of $155,000 at the time of the exchange, and was subject to a mortgage of $50,000 that was paid off before the transfer. What is Odintz's adjusted basis in the new machinery after the exchange?

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

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

For a like-kind exchange, realized gain is deferred if the exchange is solely for like-kind property.

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

Each of the following is true except for:

Which of the following transactions results solely in §1245 gain?

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

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?

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