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Exam 3: Property Dispositions

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Question 71

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Buzz Corporation sold an office building that it used in its business for $501,000. Buzz bought the building 10 years ago for $649,500 and has claimed $199,500 of depreciation expense. What is the amount and character of Buzz's gain or loss?

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Question 72

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

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

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Question 73

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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?

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

Ashburn reported a $104,800 net §1231 gain in Year 6. Assuming Ashburn reported $51,000 of nonrecaptured §1231 losses during Years 1 to 5, what amount of Ashburn's net §1231 gain for Year 6, if any, is treated as ordinary income?

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

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?

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?

Generally, the amount realized is everything of value received in a sale less selling expenses.

Luke sold land valued at $210,040. His original basis in the land was $179,980. For the land, Luke received $60,040 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? (Do not round intermediate values. Round final values to whole number.)

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

Alexandra sold equipment that she uses in her business for $101,900. Alexandra bought the equipment two years ago for $90,950 and has claimed $7,425 of depreciation expense. What is the amount and character of Alexandra's gain or loss?