Exam 26: Property Transactions: Section 1231 and Recapture

Unrecaptured 1250 gain is the amount of long-term capital gain which would be taxed as ordinary income if Sec.1250 provided for the recapture of all depreciation and not just additional depreciation.

Connors Corporation sold a warehouse during the current year for $980,000.The building had been acquired in 1980 at a cost of $830,000.The building is fully depreciated. What is the amount and nature of the gain or loss on the sale of the warehouse?

During the current year,Kayla recognizes a $40,000 Section 1231 gain on sale of land and a $22,000 Section 1231 loss on the sale of land.Prior to this,Kayla's only Section 1231 item was a $10,000 loss six years ago.Kayla is in the 28% marginal tax bracket.The amount of tax resulting from these transactions is

Cobra Inc.sold stock for a $25,000 loss five years ago.It has been carrying over the capital loss for five years,and the loss will expire at the end of this year because Cobra has not had any capital gains.Earlier this year Cobra sold a parcel of land held four years for business use and will recognize a $30,000 gain.Cobra is thinking about selling some machinery used in its business for the past three years.During this time technology has dramatically changed so Cobra will recognize a $32,000 loss on the sale of the machinery.Cobra is trying to decide whether to sell the machinery at year-end or early next year.Cobra is profitable and has a consistent marginal tax rate of 35%.When should Cobra sell the equipment?

Echo Corporation plans to sell a small building to Nate,its 65% shareholder.The building was placed in service five years ago.An independent appraisal will be obtained to set the selling price at an appropriate market price,and a $50,000 gain is expected to result.The only asset previously sold by Echo was a stock investment five years ago which resulted in a $40,000 loss.If the sale of the building closes before year-end,the gain on the building will allow recognition of the capital loss carryover before it expires.

Jeremy has $18,000 of Section 1231 gains and $23,000 of Section 1231 losses.The gains and losses are characterized as

Which of the following assets is 1231 property?

Aamir has $25,000 of net Sec.1231 gains this year on business assets.In addition,incurred $18,000 of loss on the sale of stock held six months.Aamir will include in his AGI

Terry has sold equipment used in her business.She acquired the equipment three years ago for $50,000 and has recognized $30,000 of depreciation across the years in use.In order to recognize any Sec.1231 gain,she must sell the equipment for more than

If realized gain from disposition of business equipment exceeds total depreciation or cost recovery,a portion of the gain will receive Sec.1231 treatment if the equipment's holding period is more than one year.

Jillian,whose tax rate is 39.6%,had the following sales of Section 1231 property this year: Sale of land at a gain of $15,000 Sale of land at a gain of $12,000 Sale of land at a loss of $8,000 a.What is the amount of her resulting tax liability? b.Assume instead that Jillian has a 15% marginal tax rate.What is the amount of her resulting tax liability? c.Assume instead that Jillian has a 28% marginal tax rate.What is the amount of her resulting tax liability?

Jacqueline dies while owning a building with a $1,000,000 FMV.The building is classified as Sec.1245 property acquired in 1985 for $850,000.Cost-recovery deductions of $850,000 have been claimed.Pam inherits the property. a.What is the amount of Pam's basis in the property? b.What is the amount of cost-recovery deductions that Pam must recover if she immediately sells the building?

The amount recaptured as ordinary income under either Sec.1245 or Sec.1250 can never exceed the realized gain.

The sale of inventory results in ordinary gain or loss.

Network Corporation purchased $200,000 of five-year equipment on March 24,2014.They elected to expense $60,000 of the cost under Sec.179 in effect that year.After depreciating the equipment $28,000 in 2014 and $22,400 in 2015,the equipment was sold for $190,000. a.What is the amount of the realized gain (or loss)on the sale? b.How is the gain or loss taxed?

Daniel recognizes $35,000 of Sec.1231 gains and $25,000 of Sec.1231 losses during the current year.The only other Sec.1231 item was a $4,000 loss three years ago.This year,Daniel must report

If Section 1231 applies to the sale or exchange of an unharvested crop sold with land,the costs of producing the crop are

All of the following are considered related parties for purposes of Sec.1239 recapture with the exception of

Jesse installed solar panels in front of his office building in 2014.The panels are not attached to the building.After using the solar panels for 13 months,Jesse decided to replace them with a newer model to obtain a greater savings on electricity costs.Jesse sold the old solar panels for an amount greater than his original purchase price.What tax issues should be considered with purchase,use and sale of the original solar panels?

For a business,Sec.1231 property does not include