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Exam 17: Property Transactions Section 1231 and Recapture Provisions

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Question 41

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A business machine purchased April 10,2014,for $98,000 was fully depreciated in 2014 using § 179 immediate expensing.On August 15,2016,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

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The machine was a § 1231 asset because i...

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Question 42

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The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

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B) False

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Question 43

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Blue Company sold machinery for $45,000 on December 23,2016.The machinery had been acquired on April 1,2014,for $69,000 and its adjusted basis was $34,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

Involuntary conversion gains may be deferred if the proceeds of the involuntary conversion are reinvested.

Williams owned an office building (but not the land)that was destroyed by a fire.The building was insured and Williams has a $156,000 gain because his insurance recovery exceeded his adjusted basis for the building.Williams may replace the building.Williams had taken $145,000 of depreciation on the building,has no § 1231 lookback loss,has no other § 1231 transactions for the year,and has no Schedule D transactions for the year.What is the final nature of Jamison's gain for the year and what tax rate(s)apply to the gain if: (a) He does reinvest the insurance proceeds? (b) If he doesn't reinvest the insurance proceeds?

Charmine,a single taxpayer with no dependents,has already incurred a $10,000 § 1231 gain in 2016 and has no § 1231 lookback losses.The taxpayer purchased a business machine for $100,000 five years ago,$70,000 of depreciation has been taken on it,and the machine is now worth $90,000.How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $352,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses,what is her taxable income?

Once § 1231 gains are netted against § 1231 losses,if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Assume a building is subject to § 1250 depreciation recapture because § 168(k) was used.The building is destroyed in a hurricane and this is the taxpayer's only casualty or theft for the year.In which of the following situations could there be a § 1250 depreciation recapture gain?

For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.