Exam 14: Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Red Company had an involuntary conversion on December 23,2015.The machinery had been acquired on April 1,2013,for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it.This was Red's only casualty or theft event for the year.As a result of this event,Red initially has:

An individual has the following recognized gains and losses from disposition of § 1231 assets (all the assets were vacant land): $15,000 gain,$10,000 loss,$25,000 gain,and $2,000 loss.The individual has a $5,500 § 1231 lookback loss.The individual also has a $16,000 net short-term capital loss from the disposition of stock.Which of the following statements is correct?

Verway,Inc. ,has a 2015 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2014.For 2015,Verway's net § 1231 gain is treated as:

Which of the following events could result in § 1250 depreciation recapture?

Spencer has an investment in two parcels of vacant land.Parcel 1 is a capital asset and parcel 2 is a § 1231 asset.Spencer already has short-term capital loss for the year he would like to offset with capital gain.Spencer has § 1231 lookback loss that exceeds the gain from the disposition of either land parcel.Spencer only wants to sell one land parcel and each of them would yield the same amount of gain.The gain that would be recognized exceeds the short-term capital loss Spencer already has.Which of the statements below is correct?

Blue Company sold machinery for $45,000 on December 23,2015.The machinery had been acquired on April 1,2013,for $69,000 and its adjusted basis was $34,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Which of the following creates potential § 1245 depreciation recapture and potential § 1231 gain?

Which of the following would extinguish the § 1245 recapture potential?

Section 1239 (relating to the sale of certain property between related taxpayers) does not apply unless the property:

An individual had the following gains and losses during 2015 on property held for the long-term holding period: sale of Orange common stock ($8,000 gain);sale of real property used in the taxpayer's business ($1,800 loss);destruction of real property used in the taxpayer's business by fire ($1,000 loss).Which of the following statements is correct?

An individual has a $40,000 § 1245 gain,a $35,000 § 1231 gain,a $33,000 § 1231 loss,a $3,000 § 1231 lookback loss,and a $15,000 long-term capital gain.The net long-term capital gain is:

Which of the following is correct?

Orange Company had machinery destroyed by a fire on December 23,2015.The machinery had been acquired on April 1,2013,for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed and Orange received $30,000 of insurance proceeds for the machine and did not replace it.This was Orange's only casualty or theft event for the year.As a result of this event,Orange has:

Which of the following statements is correct?

Vertical,Inc. ,has a 2015 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2014.For 2015,Vertical's net § 1231 gain is treated as:

The following assets in Jack's business were sold in 2015: Asset Holding Period Gain/(Loss) Office Equipment 6 years $1,100 Automobile 8 months ($ 800) ABC Stock (capital asset) 2 years $1,400 ​ The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2015 (the year of sale),Jack should report what amount of net capital gain and net ordinary income?

Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line) of $65,000.If Lynne sold the property,she would have a $53,000 gain.The initial characterization of the gain would be:

A retail building used in the business of a sole proprietor is sold on March 10,2015,for $342,000.The building was acquired in 2005 for $400,000 and straight-line depreciation of $104,000 had been taken on the building.What is the maximum unrecaptured § 1250 gain from the disposition of this building?

Assume a building is subject to § 1250 depreciation recapture because § 168(k) was used to depreciate it.The building is destroyed in a hurricane and this is the taxpayer's only casualty or theft for the year.In which of the following situations could there be a § 1250 depreciation recapture gain?

Copper Corporation sold machinery for $47,000 on December 31,2015.The machinery had been purchased on January 2,2012,for $60,000 and had an adjusted basis of $41,000 at the date of the sale.For 2015,what should Copper Corporation report?