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Exam 11: Property Dispositions

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Question 51

Multiple Choice

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

A) §1239.
B) §1245.
C) §291.
D) Unrecaptured §1250 gains.
E) None of the choices are correct.

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

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Question 52

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A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

A) True
B) False

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Question 53

Multiple Choice

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

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

Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

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

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 ofBrandy's gain or loss?

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?

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

Alexandra sold equipment that she uses in her business for $100,000. Alexandra bought theequipment two years ago for $90,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Alexandra's gain or loss?

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

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

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

All tax gains and losses are ultimately characterized as either ordinary or capital.

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

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?

Accounts receivable and inventory are examples of ordinary assets.

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

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

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