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Exam 11: Property Dispositions

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Question 41

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Which of the following is not an involuntary conversion?

A) Destruction caused by a hurricane.
B) Eminent domain.
C) A foreclosure.
D) Fire damage.
E) All of these choices are involuntary conversions.

F) B) and D)
G) B) and C)

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Question 42

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Silver sold machinery that it used in its business to Gold,a related entity,for $55,000.Silver bought the equipment a few years ago for $50,000 and has claimed $15,000 of depreciation expense.What is the amount and character of Silver's gain?

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$20,000 of ordinary income und...

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Question 43

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Realized gains are recognized unless there is specific exception.

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

Andrew,an individual,began business four years ago and has never sold a §1231 asset.Andrew owned each of the assets for several years.In the current year,Andrew sold the following business assets: Assuming Andrew's marginal ordinary income tax rate is 32 percent,what is the character of the gains and losses and what affect do they have on Andrew's tax liability?

Odintz traded land for land.Odintz originally purchased its land for $150,000.The land received was purchased for $200,000 and was subject to a mortgage of $50,000 that was paid off before the transfer.The fair market value of the new land is $240,000.What is Odintz's adjusted basis in the new land after the exchange?

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?

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

Suzanne,an individual,began business four years ago and has never sold a §1231 asset.Suzanne owned each of the assets for several years.In the current year,Suzanne sold the following business assets: Assuming Suzanne's marginal ordinary income tax rate is 32 percent,what is the character of the gains and losses and what affect do they have on Suzanne's tax liability?

The amount realized is the sale proceeds less the adjusted basis.

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

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Residential real property is not like-kind with nonresidential real property.

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

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

Sandra sold some equipment for $10,000 in cash,$1,000 of office products,the buyer's assumption of her $1,500 loan,and incurred selling expenses of $500.What is Sandra's amount realized in the transaction?

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

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?

Jessie sold a piece of land held for investment for $250,000.Jessie bought the land two years ago for $195,000.What is the amount and character of Jessie's gain?

Which of the following realized gains results in a recognized gain?