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Exam 11: Property Dispositions

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Question 1

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Misha traded computer equipment used in her business to a computer dealer for some new computer equipment.Misha originally purchased the computer equipment for $15,000, and it had an adjusted basis of $11,000 at the time of the exchange.The computer equipment was worth $12,000 at the time of the exchange.Misha also received a used copier worth $2,000 in the transaction.What is Misha's realized and recognized gain/loss on the exchange?

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$3,000 realized and recognized gain.
The...

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Question 2

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

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

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

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Question 3

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Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $50,000.Koch originally purchased Machine 1 for $75,000, and Machine 1's adjusted basis was $40,000 at the time of the exchange.Machine 2's seller purchased it for $65,000 and Machine 2's adjusted basis was $55,000 at the time of the exchange.What is Koch's adjusted basis in Machine 2 after the exchange?

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?

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 not true regarding installment sales?

Manassas purchased a computer several years ago for $2,200.On November 10^th of the current year, the computer was worth $800.If $1,000 of depreciation deductions had been taken, what is Manassas's tax-adjusted basis for the computer?

Mary exchanged an office building used in her business for some land.Mary originally purchased the building for $45,000, and it had an adjusted basis of $20,000 at the time of the exchange.The land had a fair market value of $40,000.Mary also gave $4,000 to the seller in the transaction.What is Mary's adjusted basis in the land after the exchange?

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

What is the character of land used in an active trade or business for two years?

The sale of land held for investment results in which of the following types of gain or loss?

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

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.

Redoubt LLC exchanged an office building used in its business for a rental house.Redoubt originally purchased the building for $80,000, and it had an adjusted basis of $53,000 at the time of the exchange.The rental house had a fair market value of $62,000.Redoubt also received $7,000 of cash in the transaction.What is Redoubt's gain or loss recognized on the exchange? What is Redoubt's basis in the rental house?

Which of the following is true regarding depreciation recapture?

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

The sale for more than the original cost basis (before depreciation) of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

Which of the following is not true regarding §1239?

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?

Ashburn reported a $105,000 net §1231 gain in Year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during Years 1-5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?