Question 1

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

Accepted Answer

A)   Sale of a personal use asset.
B)   Sale of inventory.
C)   Gain on equipment used in a trade or business and held for more than one year, if it is the only asset sale during the year.
D)   Sale of capital stock in another company.
E)   None of the choices are correct.F) A) and E)
G) B) and D)

Question 2

An asset's tax-adjusted basis is usually greater than its book-adjusted basis.

Accepted Answer

A) True 
 B)False

Question 3

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

$4,000 ordinary income and $1,280 of tax...

Question 6

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

Accepted Answer

A)   $10,000 §1231 loss.
B)   $10,000 §1245 loss.
C)   $50,000 ordinary loss.
D)   $10,000 capital loss.
E)   None of the choices are correct.F) A) and B)
G) A) and C)

Question 7

Leesburg sold a machine for $2,200 on November 10 th 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?

Accepted Answer

A)   $800 gain.
B)   $1,000 gain.
C)   $1,200 loss.
D)   $1,400 loss.
E)   None of the choices are correct.F) A) and D)
G) B) and E)

Question 8

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 E)
G) A) and C)

Question 9

Redoubt LLC exchanged an office building used in its business for a rental house. Redoubt originally purchased the building for $80,000, and it had an adjusted basis of $53,000 at the time of the exchange. The rental house had a fair market value of $62,000. Redoubt also received $7,000 of cash in the transaction. What is Redoubt's gain or loss recognized on the exchange? What is Redoubt's basis in the rental house?

Accepted Answer

$7,000 gain. $53,000 basis in the rental...

Question 10

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

Accepted Answer

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

Question 11

Sadie sold 10 shares of stock to her brother, George, for $500 16 months ago. Sadie had purchased the stock for $600 two years earlier. If George sells the stock for $700, what are the amount and character of his recognized gain or loss in the current year?

Accepted Answer

A)   $0.
B)   $100 short-term capital gain.
C)   $100 long-term capital gain.
D)   $200 short-term capital gain.
E)   None of the choices are correct.F) C) and D)
G) B) and E)

Exam 3: Property Dispositions

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

Correct Answer
verified

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Correct Answer
verified

Correct Answer
verified
$4,000 ordinary income and $1,280 of tax...
View Answer

Correct Answer
verified
$7,000 gain. $53,000 basis in the rental...
View Answer

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

Correct Answer
verified

Leesburg sold a machine for $2,200 on November 10 ^th 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?

Correct Answer
verified

Sadie sold 10 shares of stock to her brother, George, for $500 16 months ago. Sadie had purchased the stock for $600 two years earlier. If George sells the stock for $700, what are the amount and character of his recognized gain or loss in the current year?

Correct Answer
verified

An asset's tax-adjusted basis is usually greater than its book-adjusted basis.

Correct Answer
verified

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 3: Property Dispositions

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

Correct AnswerverifiedShow Answer

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Correct AnswerverifiedShow Answer

Correct Answerverified$4,000 ordinary income and $1,280 of tax...View AnswerShow Answer

Correct Answerverified$7,000 gain. $53,000 basis in the rental...View AnswerShow Answer

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss?

Correct AnswerverifiedShow Answer

Leesburg sold a machine for $2,200 on November 10 th 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?

Correct AnswerverifiedShow Answer

Sadie sold 10 shares of stock to her brother, George, for $500 16 months ago. Sadie had purchased the stock for $600 two years earlier. If George sells the stock for $700, what are the amount and character of his recognized gain or loss in the current year?

Correct AnswerverifiedShow Answer

An asset's tax-adjusted basis is usually greater than its book-adjusted basis.

Correct AnswerverifiedShow Answer

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$4,000 ordinary income and $1,280 of tax...
View Answer

Correct Answer
verified
$7,000 gain. $53,000 basis in the rental...
View Answer

Correct Answer
verified

Leesburg sold a machine for $2,200 on November 10 ^th 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?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified