Question 1

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

Question 2

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?

Accepted Answer

A)  $9,500 §1221.
B)  $9,500 §1231.
C)  $9,500 §1245.
D)  $9,500 §1250.
E)  None of the choices are correct.F) A) and D)
G) A) and C)

Question 3

For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Accepted Answer

A) True 
 B)False

Question 4

Andrea sold a piece of machinery she used in her business for ten months. The amount realized was $50,100 and the adjusted basis was $55,500. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Accepted Answer

${{[a(4)]:#,###}} ordinary loss.
The rea...

Question 5

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

Accepted Answer

A)  Sale of machinery held for less than one year.
B)  Sale of machinery held for more than one year, where the gain realized exceeds the accumulated depreciation.
C)  Sale of machinery held for more than one year, where the accumulated depreciation exceeds the gain realized.
D)  Sale of land held for more than one year, where the amount realized exceeds the adjusted basis.
E)  None of the choices are correct.F) B) and C)
G) B) and D)

Question 6

Bull Run sold a computer for $1,200 on November 10 th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Accepted Answer

$600 loss realized.
The gain o...

Question 7

Which of the following is not true regarding installment sales?

Accepted Answer

A)  Only gains are eligible for installment sale reporting.
B)  Depreciation recapture is deferred in an installment sale.
C)  The gross profit percentage is needed to determine the annual gain recognized.
D)  Stock sales are ineligible for installment sale treatment.
E)  None of the choices are correct.F) B) and E)
G) B) and D)

Question 8

Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

Accepted Answer

A)  $7,500 §1231 loss.
B)  $5,000 §1231 loss.
C)  $7,500 ordinary gain.
D)  $7,500 capital gain.
E)  None of the choices are correct.F) None of the above
G) A) and B)

Question 9

Boot is not like-kind property involved in a like-kind exchange.

Accepted Answer

A) True 
 B)False

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 E)

Question 11

Buzz Corporation sold an office building that it used in its business for $501,400. Buzz bought the building 10 years ago for $649,300 and has claimed $199,300 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Accepted Answer

${{[a(8)]:#,###}} ordinary and ${{[a(9)]...

Question 12

Which of the following is true regarding the §1231 look-back rule?

Accepted Answer

A)  It only applies when a §1231 loss occurs.
B)  It only applies when a §1231 gain occurs.
C)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 loss in the prior five years.
D)  It only applies when a §1231 gain occurs and there is a nonrecaptured §1231 gain in the prior five years.
E)  None of the choices are correct.F) B) and C)
G) A) and E)

Question 13

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Sumner sold equipment that it uses in its business for $30,200. Sumner bought the equipment a few years ago for $79,900 and has claimed $39,950 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)  $9,750 §1231 loss.
B)  $9,750 §1245 loss.
C)  $49,700 ordinary loss.
D)  $9,750 capital loss.
E)  None of the choices are correct.F) B) and C)
G) B) and E)

Question 16

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) B) and C)
G) C) and D)

Question 17

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange?

Accepted Answer

A)  The like-kind property to be received must be identified within 45 days.
B)  The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer's taxable year.
C)  The like-kind property to be received must be identified within 180 days.
D)  There is no deadline for the identification of replacement property.
E)  All of the choices are correct.F) A) and B)
G) B) and C)

Question 18

A parcel of land is always a capital asset.

Accepted Answer

A) True 
 B)False

Question 19

Odintz traded land for land. Odintz originally purchased its land for $150,000. The land received was purchased for $200,000 and was subject to a mortgage of $50,000 that was paid off before the transfer. The fair market value of the new land is $240,000. What is Odintz's adjusted basis in the new land after the exchange?

Accepted Answer

$150,000.The exchange qualifie...

Question 20

The adjusted basis is the initial basis less cost recovery deductions.

Accepted Answer

A) True 
 B)False

Exam 11: Property Dispositions

The adjusted basis is the initial basis less cost recovery deductions.

Correct Answer
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Bull Run sold a computer for $1,200 on November 10 ^th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Correct Answer
verified
$600 loss realized.
The gain o...
View Answer

Which of the following is not true regarding installment sales?

Correct Answer
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For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Correct Answer
verified

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?

Correct Answer
verified

A parcel of land is always a capital asset.

Correct Answer
verified

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

Correct Answer
verified

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

Sumner sold equipment that it uses in its business for $30,200. Sumner bought the equipment a few years ago for $79,900 and has claimed $39,950 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

Accounts receivable and inventory are examples of ordinary assets.

Correct Answer
verified

Why does §1250 recapture generally no longer apply?

Correct Answer
verified

Which of the following is true regarding the §1231 look-back rule?

Correct Answer
verified

Correct Answer
verified
$150,000.The exchange qualifie...
View Answer

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

Correct Answer
verified

Buzz Corporation sold an office building that it used in its business for $501,400. Buzz bought the building 10 years ago for $649,300 and has claimed $199,300 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Correct Answer
verified
${{[a(8)]:#,###}} ordinary and ${{[a(9)]...
View Answer

Andrea sold a piece of machinery she used in her business for ten months. The amount realized was $50,100 and the adjusted basis was $55,500. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Correct Answer
verified
${{[a(4)]:#,###}} ordinary loss.
The rea...
View Answer

Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

Correct Answer
verified

Boot is not like-kind property involved in a like-kind exchange.

Correct Answer
verified

How long after the initial exchange does a taxpayer have to identify replacement property in 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

Exam 11: Property Dispositions

The adjusted basis is the initial basis less cost recovery deductions.

Correct AnswerverifiedShow Answer

Bull Run sold a computer for $1,200 on November 10 th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Correct Answerverified$600 loss realized.The gain o...View AnswerShow Answer

Which of the following is not true regarding installment sales?

Correct AnswerverifiedShow Answer

For an installment sale, the gross profit percentage is the gain recognized divided by the gain realized.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A parcel of land is always a capital asset.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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

Sumner sold equipment that it uses in its business for $30,200. Sumner bought the equipment a few years ago for $79,900 and has claimed $39,950 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

Accounts receivable and inventory are examples of ordinary assets.

Correct AnswerverifiedShow Answer

Why does §1250 recapture generally no longer apply?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the §1231 look-back rule?

Correct AnswerverifiedShow Answer

Correct Answerverified$150,000.The exchange qualifie...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Buzz Corporation sold an office building that it used in its business for $501,400. Buzz bought the building 10 years ago for $649,300 and has claimed $199,300 of depreciation expense. What is the amount and character of Buzz's gain or loss?

Correct Answerverified${{[a(8)]:#,###}} ordinary and ${{[a(9)]...View AnswerShow Answer

Andrea sold a piece of machinery she used in her business for ten months. The amount realized was $50,100 and the adjusted basis was $55,500. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

Correct Answerverified${{[a(4)]:#,###}} ordinary loss.The rea...View AnswerShow Answer

Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

Correct AnswerverifiedShow Answer

Boot is not like-kind property involved in a like-kind exchange.

Correct AnswerverifiedShow Answer

How long after the initial exchange does a taxpayer have to identify replacement property in 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

Correct Answer
verified

Bull Run sold a computer for $1,200 on November 10 ^th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Correct Answer
verified
$600 loss realized.
The gain o...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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$150,000.The exchange qualifie...
View Answer

Correct Answer
verified

Correct Answer
verified
${{[a(8)]:#,###}} ordinary and ${{[a(9)]...
View Answer

Correct Answer
verified
${{[a(4)]:#,###}} ordinary loss.
The rea...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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