Question 1

Section 291 recapture only applies to a corporation.

Accepted Answer

A) True 
 B)False

Question 2

Janeway Corporation has ordinary taxable income of $127,000 in 2018 before consideration of any of the following property transactions. It sold two blocks of stocks held for investment: one yielded a short-term capital gain of $8,000 and the other a long-term capital loss of $14,000. In addition, it sold four pieces of machinery used for three years for $30,000. The machines had cost $50,000 originally and had $35,000 of depreciation deductions taken. They also sold a building for $400,000 that they had purchased in 2000 for $390,000. The depreciation deductions up to the date of sale were $89,000. Determine the amount and type of the net gains and losses from the property transactions and Janeway Corporation's taxable income for 2018.

Accepted Answer

Machines: $30,000 - $15,000 basis = $15,

Question 3

Nancy sold her Section 1202 stock for $9,000,000 on August 7, 2017. She had purchased the stock nine years ago for $1,500,000. She invested $4,500,000 in other qualifying Section 1202 stock. How will Nancy treat the gain on this sale for tax purposes? How would your answer change if the stock is instead sold in 2018?

Accepted Answer

$9,000,000 - $1,500,000 = $7,500,000 tot

Question 4

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-Grill Corporation sold all of its business assets when it went out of business. Which of the following is a capital asset?

Accepted Answer

A)  Inventory 
B)  Office equipment 
C)  Goodwill 
D)  Factory machinery 
A)  Inventory 
B)  Office equipment 
C)  Goodwill 
D)  Factory machinery

Question 5

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

Accepted Answer

A)  This provision allows 50% of the gain from sale of any residence to be excluded from income. 
B)  A vacation home used as a residence for at least five months of the year will qualify for this exclusion. 
C)  It is possible for taxpayers to sell their home and qualify for this exclusion every two years. 
D)  The gain on the sale can be deferred and rolled over into another residence instead of electing the exclusion. 
A)  This provision allows 50% of the gain from sale of any residence to be excluded from income. 
B)  A vacation home used as a residence for at least five months of the year will qualify for this exclusion. 
C)  It is possible for taxpayers to sell their home and qualify for this exclusion every two years. 
D)  The gain on the sale can be deferred and rolled over into another residence instead of electing the exclusion.

Question 6

Corporate net capital gains receive no tax-favored treatment.

Accepted Answer

A) True 
 B)False

Question 7

Paul has a $45,000 net Section 1231 gain in the current tax year from his only property transaction. Last year he had a $12,000 net Section 1231 gain, but two years ago he had a $51,000 net Section 1231 loss. If he has no other property transactions in the current year, how will Paul treat his net Section 1231 gains this year?

Accepted Answer

A)  $45,000 long-term capital gain 
B)  $45,000 ordinary income 
C)  $39,000 ordinary income; $6,000 Section 1245 gain 
D)  $39,000 ordinary income; $6,000 long-term capital gain 
A)  $45,000 long-term capital gain 
B)  $45,000 ordinary income 
C)  $39,000 ordinary income; $6,000 Section 1245 gain 
D)  $39,000 ordinary income; $6,000 long-term capital gain

Question 8

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-Gain on the sale of stock by an individual.

Accepted Answer

The answer of Identify the type(s) of gain or loss...

Question 9

What is depreciation recapture?

Accepted Answer

Depreciation recapture is the requiremen

Question 10

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-Loss on the sale of equipment used in a business for three years.

Accepted Answer

The answer of Identify the type(s) of gain or loss...

Question 11

Edna had $20,000 of ordinary income. In addition, she had a $1,500 short-term capital gain on one stock and a $4,900 long-term capital loss on another. What is her adjusted gross income?

Accepted Answer

A)  $21,500 
B)  $17,000 
C)  $16,600 
D)  $15,100 
A)  $21,500 
B)  $17,000 
C)  $16,600 
D)  $15,100

Question 12

The holding period for an asset acquired by inheritance is determined by including the period
the asset was held by the decedent.

Accepted Answer

A) True 
 B)False

Question 13

Sheldon had salary income of $40,000. In addition, he had the following gains and losses on his property transactions: Long-term capital gain = $14,000; long-term capital loss = $6,000; short-term capital gain = $4,000; short-term capital loss = $8,000. If Sheldon has no other income items, what is his total income before any deductions for the year?

Accepted Answer

A)  $44,000 
B)  $47,000 
C)  $48,000 
D)  $52,000 
A)  $44,000 
B)  $47,000 
C)  $48,000 
D)  $52,000

Question 14

Ethan, a sole proprietor, sold the following assets in 2018:   The equipment was purchased several years ago but the XYZ stock was purchased as an investment on 3/9/18 and was sold on 11/15/18. Ethan is in the 32% marginal tax bracket for 2018. At the beginning of 2018, he had $2,000 of unrecaptured Section 1231 losses from 2 years ago. How much additional tax will Ethan pay as a result of these transactions?

Accepted Answer

A)  $1,200 
B)  $1,650 
C)  $2,390 
D)  $2,640 
A)  $1,200 
B)  $1,650 
C)  $2,390 
D)  $2,640

Question 15

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-Gain on the sale of a machine used by a business for 11 months.

Accepted Answer

The answer of Identify the type(s) of gain or loss...

Question 16

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

Accepted Answer

A)  100 shares of Bilco stock bought for $8,000 on January 22 of year 3 and sold for $10,000 on January 22 of year 4. 
B)  20 acres of investment land bought for $8,000 on January 31 of year 3 and sold for $7,000 on February 2 of year 4. 
C)  150 shares of Data stock bought for $15,000 on April 1 of year 2 and sold for $17,000 on May 28 of year 4. 
A)  100 shares of Bilco stock bought for $8,000 on January 22 of year 3 and sold for $10,000 on January 22 of year 4. 
B)  20 acres of investment land bought for $8,000 on January 31 of year 3 and sold for $7,000 on February 2 of year 4. 
C)  150 shares of Data stock bought for $15,000 on April 1 of year 2 and sold for $17,000 on May 28 of year 4.

Question 17

What are the carryover provisions for unused capital losses applicable to corporations?

Accepted Answer

A)  Carry back 3 years and forward 5 years 
B)  Carry back 2 years and forward 20 years 
C)  Carry forward 20 years only 
D)  Carry forward indefinitely 
A)  Carry back 3 years and forward 5 years 
B)  Carry back 2 years and forward 20 years 
C)  Carry forward 20 years only 
D)  Carry forward indefinitely

Question 18

A corporation sells a machine used in its business for 9 years for $22,000. The machine originally cost $120,000 and was fully depreciated. Its gain will be treated as:

Accepted Answer

A)  Capital gain 
B)  Section 1231 gain 
C)  Section 1245 recapture 
D)  Section 1250 recapture 
A)  Capital gain 
B)  Section 1231 gain 
C)  Section 1245 recapture 
D)  Section 1250 recapture

Question 19

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-Mason received $20,000 cash and equipment worth $10,000 in exchange for land that was encumbered by an $80,000 mortgage that the buyer assumed. Mason's basis for the land is $90,000. What is Mason's realized gain or loss on the sale?

Accepted Answer

A)  $20,000 realized gain 
B)  $10,000 realized gain 
C)  $10,000 realized loss 
D)  no realized gain or loss 
A)  $20,000 realized gain 
B)  $10,000 realized gain 
C)  $10,000 realized loss 
D)  no realized gain or loss

Question 20

The Section 1231 look-back rules change the character of capital losses incurred in the
previous 5 years.

Accepted Answer

A) True 
 B)False

Section 291 recapture only applies to a corporation.

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

Corporate net capital gains receive no tax-favored treatment.

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Gain on the sale of stock by an individual.

What is depreciation recapture?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Loss on the sale of equipment used in a business for three years.

Edna had $20,000 of ordinary income. In addition, she had a $1,500 short-term capital gain on one stock and a $4,900 long-term capital loss on another. What is her adjusted gross income?

The holding period for an asset acquired by inheritance is determined by including the period the asset was held by the decedent.

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Gain on the sale of a machine used by a business for 11 months.

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

What are the carryover provisions for unused capital losses applicable to corporations?

A corporation sells a machine used in its business for 9 years for $22,000. The machine originally cost $120,000 and was fully depreciated. Its gain will be treated as:

The Section 1231 look-back rules change the character of capital losses incurred in the previous 5 years.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 8: Property Dispositions

Section 291 recapture only applies to a corporation.

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

Corporate net capital gains receive no tax-favored treatment.

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Gain on the sale of stock by an individual.

What is depreciation recapture?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Loss on the sale of equipment used in a business for three years.

Edna had $20,000 of ordinary income. In addition, she had a $1,500 short-term capital gain on one stock and a $4,900 long-term capital loss on another. What is her adjusted gross income?

The holding period for an asset acquired by inheritance is determined by including the period the asset was held by the decedent.

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Gain on the sale of a machine used by a business for 11 months.

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

What are the carryover provisions for unused capital losses applicable to corporations?

A corporation sells a machine used in its business for 9 years for $22,000. The machine originally cost $120,000 and was fully depreciated. Its gain will be treated as:

The Section 1231 look-back rules change the character of capital losses incurred in the previous 5 years.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters