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 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 these.F) None of the above
G) A) and D)

Question 2

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 or...

Question 3

Redoubt LLC traded machinery used in its business to a machinery dealer for some new machinery. Redoubt originally purchased the machinery for $80,000 and it had an adjusted basis of $53,000 at the time of the exchange. The new machinery had a fair market value of $62,000. Redoubt also received $7,000 of computer equipment in the transaction. What is Redoubt's gain or loss recognized on the exchange?

Accepted Answer

The answer of Redoubt LLC traded machinery used in its...

Question 4

Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the equipment 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 ordinary gain.
D)   $20,000 capital gain.
E)   None of these.F) All of the above
G) A) and C)

Question 5

Which of the following is true regarding depreciation recapture?

Accepted Answer

A)   Changes the character of a loss.
B)   Changes the character of a gain.
C)   Changes the amount of a gain.
D)   Only applies to ordinary assets.
E)   None of these.F) All of the above
G) A) and E)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

Accepted Answer

A)   Capital.
B)   §291.
C)   §1231.
D)   §1245.
E)   None of these.F) B) and C)
G) A) and E)

Question 8

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 a...

Question 9

Which of the following is not used in the calculation of the amount realized?

Accepted Answer

A)   Cash.
B)   Adjusted basis.
C)   Fair market value of other property received.
D)   Buyer's assumption of liabilities.
E)   All of these.F) A) and D)
G) C) and D)

Question 10

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 and where the gain realized exceeds the accumulated depreciation.
C)   Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized.
D)   Sale of land held for more than one year and where the amount realized exceeds the adjusted basis.
E)   None of these.F) A) and E)
G) All of the above

Exam 10: Property Dispositions

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

Correct Answer
verified

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

Correct Answer
verified

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which of the following is not used in the calculation of the amount realized?

Correct Answer
verified

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 or...
View Answer

Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the equipment 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

Which of the following is true regarding depreciation recapture?

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 a...
View Answer

Exam 10: Property Dispositions

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not used in the calculation of the amount realized?

Correct AnswerverifiedShow Answer

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 or...View AnswerShow Answer

Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the equipment 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

Which of the following is true regarding depreciation recapture?

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 a...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$25,000 or...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$10,000 §1231 gain a...
View Answer