Question 1

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

Accepted Answer

A)  Capital. 
B)  §291. 
C)  §1231. 
D)  §1245. 
E)  None of the choices are correct. 
A)  Capital. 
B)  §291. 
C)  §1231. 
D)  §1245. 
E)  None of the choices are correct.

Question 2

The sale of land held for investment results in which of the following types of gain or loss?

Accepted Answer

A)  Capital. 
B)  Ordinary. 
C)  §1231. 
D)  §1245. 
E)  None of the choices are correct. 
A)  Capital. 
B)  Ordinary. 
C)  §1231. 
D)  §1245. 
E)  None of the choices are correct.

Question 3

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 4

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment for $15,000, and it had an adjusted basis of $11,000 at the time of the exchange. The computer equipment was worth $12,000 at the time of the exchange. Misha also received a used copier worth $2,000 in the transaction. What is Misha's realized and recognized gain/loss on the exchange?

Accepted Answer

$3,000 realized and recognized gain.
The

Question 5

The adjusted basis is the initial basis less cost recovery deductions.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Accepted Answer

A)  $9,500 §1221. 
B)  $9,500 §1231. 
C)  $9,500 §1245. 
D)  $9,500 §1250. 
E)  None of the choices are correct. 
A)  $9,500 §1221. 
B)  $9,500 §1231. 
C)  $9,500 §1245. 
D)  $9,500 §1250. 
E)  None of the choices are correct.

Question 8

Ordinary gains and losses are obtained on the sale of investments.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

A)  Capital and ordinary. 
B)  Ordinary only. 
C)  Capital and §1231. 
D)  §1245 and §1231. 
E)  None of the choices are correct. 
A)  Capital and ordinary. 
B)  Ordinary only. 
C)  Capital and §1231. 
D)  §1245 and §1231. 
E)  None of the choices are correct.

Question 10

Which of the following is not an involuntary conversion?

Accepted Answer

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

Question 11

Which one of the following is not considered boot in a like-kind exchange?

Accepted Answer

A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of the choices can be considered as boot. 
A)  Cash. 
B)  Other property. 
C)  Mortgage given. 
D)  Mortgage received. 
E)  All of the choices can be considered as boot.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  The tax laws essentially treat related parties as the same taxpayer. 
B)  The holding period of the seller carries over to the buyer. 
C)  The related person always receives a carryover basis. 
D)  The seller's realized loss is deferred until the buyer sells the assets. 
E)  None of the choices are correct. 
A)  The tax laws essentially treat related parties as the same taxpayer. 
B)  The holding period of the seller carries over to the buyer. 
C)  The related person always receives a carryover basis. 
D)  The seller's realized loss is deferred until the buyer sells the assets. 
E)  None of the choices are correct.

Question 15

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Accepted Answer

A)  $800 gain. 
B)  $1,000 gain. 
C)  $1,200 loss. 
D)  $1,400 loss. 
E)  None of the choices are correct. 
A)  $800 gain. 
B)  $1,000 gain. 
C)  $1,200 loss. 
D)  $1,400 loss. 
E)  None of the choices are correct.

Question 16

The gain or loss realized on the sale of an asset is the amount realized less the adjusted basis.

Accepted Answer

A) True 
 B)False

Question 17

Gainesville LLC sold the following business assets during the current year: (1) machinery, $20,000 cost basis, $4,000 depreciation, $22,000 proceeds; (2) automobile, $15,000 cost basis, $12,000 depreciation, $7,000 proceeds; (3) equipment, $15,000 cost basis, $10,000 depreciation, $4,000 proceeds; (4) computer equipment, $35,000 cost basis, $16,000 depreciation, $15,000 proceeds; (5) Winchester had unrecaptured §1231 losses of $5,000 in the prior five years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?

Accepted Answer

$8,000 ordinary gain and $3,000 §1231 lo

Question 18

Bull Run sold a computer for $1,200 on November 10th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Accepted Answer

$600 loss realized.
The gain o

Question 19

Which of the following is not true regarding §1239?

Accepted Answer

A)  It only applies to related taxpayers. 
B)  It only applies to gains on sales of depreciable property. 
C)  It only applies to gains on sales of nonresidential real property. 
D)  It does not apply to losses. 
E)  None of the choices are correct. 
A)  It only applies to related taxpayers. 
B)  It only applies to gains on sales of depreciable property. 
C)  It only applies to gains on sales of nonresidential real property. 
D)  It does not apply to losses. 
E)  None of the choices are correct.

Question 20

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

Accepted Answer

A) True 
 B)False

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

The sale of land held for investment results in which of the following types of gain or loss?

Accounts receivable and inventory are examples of ordinary assets.

The adjusted basis is the initial basis less cost recovery deductions.

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

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Ordinary gains and losses are obtained on the sale of investments.

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?

Which of the following is not an involuntary conversion?

Which one of the following is not considered boot in a like-kind exchange?

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

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

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

Leesburg sold a machine for $2,200 on November 10^th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

The gain or loss realized on the sale of an asset is the amount realized less the adjusted basis.

Bull Run sold a computer for $1,200 on November 10^th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Which of the following is not true regarding §1239?

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

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 3: Property Dispositions

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

The sale of land held for investment results in which of the following types of gain or loss?

Accounts receivable and inventory are examples of ordinary assets.

The adjusted basis is the initial basis less cost recovery deductions.

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

Foreaker LLC sold a piece of land that it uses in its business for $52,000. Foreaker bought the land two years ago for $42,500. What is the amount and character of Foreaker's gain?

Ordinary gains and losses are obtained on the sale of investments.

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?

Which of the following is not an involuntary conversion?

Which one of the following is not considered boot in a like-kind exchange?

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

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

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

Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

The gain or loss realized on the sale of an asset is the amount realized less the adjusted basis.

Bull Run sold a computer for $1,200 on November 10th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Which of the following is not true regarding §1239?

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

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Leesburg sold a machine for $2,200 on November 10^th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?

Bull Run sold a computer for $1,200 on November 10^th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?