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Exam 11: Property Dispositions

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Question 71

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Sarah sold 1,000 shares of stock to her brother, David, for $18,000 more than a year ago. Sarah had purchased the stock for $20,000 several years earlier. What is the amount and character of David's recognized gain or loss in the current year if he sells the stock for either $15,000 or $25,000?

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$3,000 long-term capital loss if sold fo...

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Question 72

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Andrea sold a piece of machinery she used in her business for nine months. The amount realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain or loss realized, and what is the character of the gain or loss?

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$5,000 ordinary loss.
The real...

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Question 73

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In a deferred like-kind exchange, the like-kind property to be received must be identified within 45 days and acquired within 180 days from the initial exchange.

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment for $14,100, and it had an adjusted basis of $11,180 at the time of the exchange.The computer equipment was worth $21,000 at the time of the exchange. Misha also received a used copier worth $1,910 in the transaction. What is Misha's realized and recognized gain/loss on the exchange?

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

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

Frederique sold furniture that she uses in her business for $15,950. Frederique bought the furniture a few years ago for $39,810 and has claimed $20,190 of depreciation expense. What is the amount and character of Frederique's gain or loss?

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

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

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Residential real property is not like-kind with nonresidential real property.

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?