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Exam 11: Property Dispositions

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Question 31

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Which of the following results in an ordinary gain or loss?

A) Sale of a machine at a gain.
B) Sale of stock held for investment.
C) Sale of a §1231 asset.
D) Sale of inventory.
E) None of the choices are correct.

F) A) and D)
G) A) and B)

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Question 32

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

A) Loss on like-kind property is not recognized.
B) Gains on boot given are deferred.
C) Losses on boot given are not recognized.
D) Land can be like-kind with a building.
E) All of the choices are True.

F) C) and D)
G) A) and E)

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Question 33

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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?

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?

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  in the transaction. What is Mary's adjusted basis in the land after the exchange?

Which of the following is not an involuntary conversion?

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

What is the primary purpose of a third-party intermediary in a deferred like-kind exchange?

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

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?

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

§1231 assets include all assets used in a trade or business.

For a like-kind exchange, realized gain is deferred if the exchange is solely for like-kind property.

Unrecaptured §1250 gains apply only to individuals.

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

Luke sold land valued at $210,000. His original basis in the land was $180,000. For the land, Luke received $60,000 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?

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

Which of the following does not ultimately result in a capital gain or loss?

Which of the following is not usually included in an asset's tax basis?

§1250 recaptures the excess of accelerated depreciation over straight-line depreciation on real property placed in service before 1987 as ordinary income.