Question 1

The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 2

Blue Company sold machinery for $45,000 on December 23,2016.The machinery had been acquired on April 1,2014,for $69,000 and its adjusted basis was $34,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Accepted Answer

A) $0 § 1231 gain,$10,800 § 1245 recapture gain,$0 § 1231 loss. 
B) $0 § 1231 gain,$0 § 1245 recapture gain,$14,800 § 1231 loss. 
C) $0 § 1231 gain,$34,200 § 1245 recapture gain,$0 § 1231 loss. 
D) $0 § 1231 gain,$10,800 § 1245 recapture gain,$34,200 § 1231 loss. 
E) None of the above. 
A) $0 § 1231 gain,$10,800 § 1245 recapture gain,$0 § 1231 loss. 
B) $0 § 1231 gain,$0 § 1245 recapture gain,$14,800 § 1231 loss. 
C) $0 § 1231 gain,$34,200 § 1245 recapture gain,$0 § 1231 loss. 
D) $0 § 1231 gain,$10,800 § 1245 recapture gain,$34,200 § 1231 loss. 
E) None of the above.

Question 3

Once § 1231 gains are netted against § 1231 losses,if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Accepted Answer

A) True 
 B)False

Question 4

Involuntary conversion gains may be deferred if the proceeds of the involuntary conversion are reinvested.

Accepted Answer

A) True 
 B)False

Question 5

For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.

Accepted Answer

A) True 
 B)False

Question 6

Assume a building is subject to § 1250 depreciation recapture because § 168(k)was used.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?

Accepted Answer

A) There is a loss because the insurance recovery is less than the adjusted basis. 
B) There is a gain because the insurance recovery exceeds the adjusted basis. 
C) Because of the length of time the building has been held,there is no remaining additional depreciation. 
D) There is no insurance recovery and the adjusted basis of the building is greater than zero. 
E) None of the above. 
A) There is a loss because the insurance recovery is less than the adjusted basis. 
B) There is a gain because the insurance recovery exceeds the adjusted basis. 
C) Because of the length of time the building has been held,there is no remaining additional depreciation. 
D) There is no insurance recovery and the adjusted basis of the building is greater than zero. 
E) None of the above.

Question 7

Charmine,a single taxpayer with no dependents,has already incurred a $10,000 § 1231 gain in 2016 and has no § 1231 lookback losses.The taxpayer purchased a business machine for $100,000 five years ago,$70,000 of depreciation has been taken on it,and the machine is now worth $90,000.How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $352,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses,what is her taxable income?

Accepted Answer

The current year § 1231 gain will not be

Question 8

A business machine purchased April 10,2014,for $98,000 was fully depreciated in 2014 using § 179 immediate expensing.On August 15,2016,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

Accepted Answer

The machine was a § 1231 asset because i

Question 9

Williams owned an office building (but not the land)that was destroyed by a fire.The building was insured and Williams has a $156,000 gain because his insurance recovery exceeded his adjusted basis for the building.Williams may replace the building.Williams had taken $145,000 of depreciation on the building,has no § 1231 lookback loss,has no other § 1231 transactions for the year,and has no Schedule D transactions for the year.What is the final nature of Jamison's gain for the year and what tax rate(s)apply to the gain if:
(a)
He does reinvest the insurance proceeds?
(b)
If he doesn't reinvest the insurance proceeds?

Accepted Answer

(a)
 Williams initially has a casualty g

Question 10

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

Accepted Answer

Section 1245 depreciation recapture pote

The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

Blue Company sold machinery for $45,000 on December 23,2016.The machinery had been acquired on April 1,2014,for $69,000 and its adjusted basis was $34,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Once § 1231 gains are netted against § 1231 losses,if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Involuntary conversion gains may be deferred if the proceeds of the involuntary conversion are reinvested.

For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.

Assume a building is subject to § 1250 depreciation recapture because § 168(k)was used.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?

A business machine purchased April 10,2014,for $98,000 was fully depreciated in 2014 using § 179 immediate expensing.On August 15,2016,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 17: Property Transactions Section 1231 and Recapture Provisions

The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

Blue Company sold machinery for $45,000 on December 23,2016.The machinery had been acquired on April 1,2014,for $69,000 and its adjusted basis was $34,200.The § 1231 gain,§ 1245 recapture gain,and § 1231 loss from this transaction are:

Once § 1231 gains are netted against § 1231 losses,if the gains exceed the losses,the net gain is offset by the "lookback" nonrecaptured § 1231 losses.

Involuntary conversion gains may be deferred if the proceeds of the involuntary conversion are reinvested.

For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.

Assume a building is subject to § 1250 depreciation recapture because § 168(k)was used.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?

A business machine purchased April 10,2014,for $98,000 was fully depreciated in 2014 using § 179 immediate expensing.On August 15,2016,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters