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Exam 10: Property Dispositions

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Question 41

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Buzz Corporation sold an office building that it used in its business for $500,000.Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense.What is the amount and character of Buzz's gain or loss?

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$10,000 ordinary and $40,000 §...

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Question 42

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An asset's tax adjusted basis is usually greater than its book adjusted basis.

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Question 43

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Reid had a business building destroyed in a fire.The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken.Although the old building had a fair market value of $425,000 at the time of the fire,his insurance proceeds were limited to $400,000.Reid found qualified replacement property which he acquired six months later for $390,000.What is the amount of Reid's realized gain and recognized gain?

Kristi had a business building destroyed in an earthquake.The old building was purchased for $250,000 and $80,000 of depreciation deductions had been taken.Her insurance proceeds were $550,000.Although the replacement property was much larger and nicer than her old building,Kristi's new property qualified as replacement property.She acquired the new property 13 months after the earthquake for $620,000.What is the amount of Kristi's realized gain and recognized gain and the basis in her new property?

All tax gains and losses are ultimately characterized as either ordinary or capital.

Arlington LLC exchanged land used in its business for some new land.Arlington originally purchased the land for $28,000.The new land had a fair market value of $35,000.Arlington also received $2,000 of office equipment in the transaction.What is Arlington's gain or loss recognized on the exchange?

Brandon,an individual,began business four years ago and has never sold a §1231 asset.Brandon owned each of the assets for several years.In the current year,Brandon sold the following business assets:   $\begin{array} { l r r r } &&\text { Accumulated }\\\text {Asset}&\text { Original Cost } & \text { Depreciation } & {\text { Gain/Loss }} \\\text { Machinery } & \$ 30,000 & \$ 7,000 & \$ 10,000 \\\text { Computers } & 10,000 & 6,000 & ( 2,000 ) \\\text { Building } & 90,000 & 20,000 & ( 2,000 ) \end{array}$ Assuming Brandon's marginal ordinary income tax rate is 32 percent,what effect do the gains and losses have on Brandon's tax liability?

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

Assets held for investment and personal use assets are examples of capital assets.

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

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.

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

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is:

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?

Which of the following is how gain or loss realized is calculated?

Andrea sold a piece of machinery she used in her business for 9 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?

The gain or loss realized on the sale of an asset is the amount realized less the adjusted basis.

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

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

The gain or loss realized on the sale of an asset is always recognized for tax purposes.