Exam 11: Property Dispositions

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 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?

Tyson had a parcel of undeveloped investment land that he wanted to trade for a warehouse to be used in his business.He found a buyer willing to pay him $450,000 for the land.He transferred the land to a third party intermediary on April 1st of the current year.On May 10th,with the help of a commercial real estate agent,Tyson identified two suitable warehouses.On August 10th he made an offer on the first building and was rejected.On August 13th an offer was accepted on the second warehouse.On September 23rd the third party intermediary transferred $500,000 ($450,000 from the original property plus $50,000 from Tyson)to the seller and conveyed title to the warehouse to Tyson.Explain whether the exchange of property qualifies as a like-kind exchange.

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is:

Alexandra sold equipment that she uses in her business for $100,000.Alexandra bought the equipment two years ago for $90,000 and has claimed $25,000 of depreciation expense.What is the amount and character of Alexandra's gain or loss?

Reid had a business building destroyed in a fire.The old building was purchased for $375,000,and $60,000 of depreciation deductions had been taken.Although the old building had a fair market value of $425,000 at the time of the fire,his insurance proceeds were limited to $400,000.Reid found qualified replacement property that he acquired six months later for $390,000.What is the amount of Reid's realized gain and recognized gain?

Which of the following is how gain or loss realized is calculated?

A net §1231 gain becomes ordinary while a net §1231 loss becomes long-term capital gain.

Explain whether the sale at a loss of a machine used in a trade or business generates an ordinary or capital loss?

Collins Corporation,of Camden,Maine,wants to exchange its manufacturing facility for Rockland Company's building.Both parties agree that Collins's facility is worth $200,000 and that Rockland's building is worth $175,000.Collins will not enter into the transaction unless it qualifies as a like-kind exchange.If Collins wants to avoid gain,what could the parties do to equalize the value exchanged but still allow the exchange to qualify as a like-kind exchange?

Brad sold a rental house that he owned for $250,000.Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense.What is the amount and character of Brad's gain or loss?

Alpha sold machinery that it used in its business to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

A parcel of land is always a capital asset.

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

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?

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

A simultaneous exchange must take place for a transaction to qualify as a like-kind exchange.

Which of the following sections does not recapture or recharacterize a taxpayer's gain?

Each of the following is true except for:

Unrecaptured §1250 gains apply only to individuals.