Exam 11: Property Dispositions

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?

Assets held for investment and personal use assets are examples of capital assets.

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

Realized gains are recognized unless there is specific exception.

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?

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

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment for $14,900, and it had an adjusted basis of $11,020 at the time of the exchange.The computer equipment was worth $13,000 at the time of the exchange. Misha also received a used copier worth $1,990 in the transaction. What is Misha's realized and recognized gain/loss on the exchange?

Brandy sold a rental house that she owned for $150,000. Brandy bought the house four years ago for $140,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Brandy's gain or loss?

Which of the following is true regarding the §1231 look-back rule?

Which of the following is not true regarding an asset's adjusted basis?

Unrecaptured §1250 gains apply only to individuals.

Alexandra sold equipment that she uses in her business for $100,700. Alexandra bought the equipment two years ago for $90,350 and has claimed $18,525 of depreciation expense. What is the amount and character of Alexandra's gain or loss?