Question 1

Realized gains are recognized unless there is specific exception.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   §1239.
B)   §1250.
C)   §1245.
D)   §291.
E)   None of the choices are correct.F) A) and D)
G) A) and C)

Question 3

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Accepted Answer

A) True 
 B)False

Question 4

When do unrecaptured §1250 gains apply?

Accepted Answer

A)   When the taxpayer makes the election.
B)   It applies only when noncorporate taxpayers sell depreciable real property at a gain.
C)   It applies when §1245 recapture trumps §1250 recapture.
D)   It applies only when real property purchased before 1986 is sold at a gain.
E)   None of the choices are correct.F) B) and E)
G) B) and D)

Question 5

Which of the following results in an ordinary gain or loss?

Accepted Answer

A)   Sale of a machine at a gain.
B)   Sale of stock held for investment.
C)   Sale of a §1231 asset.
D)   Sale of inventory.
E)   None of the choices are correct.F) None of the above
G) B) and D)

Question 6

Alpha sold machinery that it used in its business to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

Accepted Answer

A)   $20,000 ordinary income under §1239.
B)   $10,000 ordinary gain and $10,000 §1231 gain.
C)   $20,000 §1231 gain.
D)   $20,000 capital gain.
E)   None of the choices are correct.F) A) and B)
G) A) and C)

Question 7

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?

Accepted Answer

A)   $25,000 §1231 gain.
B)   $20,000 ordinary gain, and $5,000 §1231 gain.
C)   $5,000 ordinary gain, and $20,000 §1231 gain.
D)   $25,000 capital gain.
E)   None of the choices are correct.F) None of the above
G) A) and B)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

$8,571 gain recognized in the current ye...

Question 10

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) B) and C)
G) A) and E)

Question 11

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building 10 years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Accepted Answer

A)   $40,000 ordinary and $360,000 §1231 gain.
B)   $200,000 ordinary and $200,000 §1231 gain.
C)   $400,000 ordinary gain.
D)   $400,000 capital gain.
E)   None of the choices are correct.F) B) and E)
G) A) and E)

Question 12

Alexandra sold equipment that she uses in her business for $100,000. Alexandra bought the equipment 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?

Accepted Answer

$25,000 ordinary gain, and $10,000 §1231...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Unrecaptured §1250 gains apply only to individuals.

Accepted Answer

A) True 
 B)False

Question 15

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is:

Accepted Answer

A)   The basis is equal to the fair market value of the new property.
B)   The basis is equal to the fair market value of the old property.
C)   The basis is equal to the adjusted basis of the old property.
D)   The basis is equal to the cost basis of the old property.
E)   All of the choices are correct.F) All of the above
G) A) and B)

Question 16

Which one of the following is not true regarding a like-kind exchange?

Accepted Answer

A)   Loss on like-kind property is not recognized.
B)   Gains on boot given are deferred.
C)   Losses on boot given are not recognized.
D)   Land can be like-kind with a building.
E)   All of the choices are true.F) B) and E)
G) A) and E)

Question 17

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 of Brandy's gain or loss?

Accepted Answer

$10,000 §1231 gain and $25,000 unrecaptu...

Question 18

Why does §1250 recapture generally no longer apply?

Accepted Answer

A)   Congress repealed the code section.
B)   Real property is depreciated using the straight-line method after 1986.
C)   §1245 recapture trumps §1250 recapture.
D)   Because unrecaptured §1250 gains now apply to all taxpayers instead.
E)   None of the choices are correct.F) All of the above
G) A) and D)

Question 19

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?

Accepted Answer

$380,000 realized gain, $0 recognized ga...

Question 20

Only accelerated depreciation is recaptured for §1245 assets.

Accepted Answer

A) True 
 B)False

Exam 3: Property Dispositions

Alexandra sold equipment that she uses in her business for $100,000. Alexandra bought the equipment 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?

Correct Answer
verified
$25,000 ordinary gain, and $10,000 §1231...
View Answer

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building 10 years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Correct Answer
verified

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?

Correct Answer
verified

Realized gains are recognized unless there is specific exception.

Correct Answer
verified

Only accelerated depreciation is recaptured for §1245 assets.

Correct Answer
verified

Which of the following results in an ordinary gain or loss?

Correct Answer
verified

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?

Correct Answer
verified
$8,571 gain recognized in the current ye...
View Answer

When do unrecaptured §1250 gains apply?

Correct Answer
verified

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

Correct Answer
verified

Alpha sold machinery that it used in its business to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

Correct Answer
verified

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is:

Correct Answer
verified

Why does §1250 recapture generally no longer apply?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
$380,000 realized gain, $0 recognized ga...
View Answer

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

Correct Answer
verified

Which one of the following is not true regarding a like-kind exchange?

Correct Answer
verified

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

Correct Answer
verified

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Correct Answer
verified

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 of Brandy's gain or loss?

Correct Answer
verified
$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

Unrecaptured §1250 gains apply only to individuals.

Correct Answer
verified

Exam 3: Property Dispositions

Alexandra sold equipment that she uses in her business for $100,000. Alexandra bought the equipment 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?

Correct Answerverified$25,000 ordinary gain, and $10,000 §1231...View AnswerShow Answer

Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building 10 years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Realized gains are recognized unless there is specific exception.

Correct AnswerverifiedShow Answer

Only accelerated depreciation is recaptured for §1245 assets.

Correct AnswerverifiedShow Answer

Which of the following results in an ordinary gain or loss?

Correct AnswerverifiedShow Answer

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?

Correct Answerverified$8,571 gain recognized in the current ye...View AnswerShow Answer

When do unrecaptured §1250 gains apply?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Alpha sold machinery that it used in its business to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

Correct AnswerverifiedShow Answer

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is:

Correct AnswerverifiedShow Answer

Why does §1250 recapture generally no longer apply?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverified$380,000 realized gain, $0 recognized ga...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is not true regarding a like-kind exchange?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Correct AnswerverifiedShow Answer

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 of Brandy's gain or loss?

Correct Answerverified$10,000 §1231 gain and $25,000 unrecaptu...View AnswerShow Answer

Unrecaptured §1250 gains apply only to individuals.

Correct AnswerverifiedShow Answer

Correct Answer
verified
$25,000 ordinary gain, and $10,000 §1231...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$8,571 gain recognized in the current ye...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$380,000 realized gain, $0 recognized ga...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$10,000 §1231 gain and $25,000 unrecaptu...
View Answer

Correct Answer
verified