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

A business machine purchased April 10, 2016, for $98,000 was fully depreciated in 2016 using § 179 immediate expensing. On August 15, 2018, the machine was sold for $67,000. What is the amount and nature of the gain or loss from disposition of the machine?

Red Company had an involuntary conversion on December 23, 2018. The machinery had been acquired on April 1, 2016, 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:

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017. For 2018, Vertical's net § 1231 gain is treated as:

Property sold to a related party that is depreciable by the purchaser may cause the seller to have ordinary gain.

Which of the following assets held by a manufacturing business is a § 1231 asset?

The effect of § 1244 may be to convert a capital loss into an ordinary loss deductible for adjusted gross income.

A lease cancellation payment received by a lessee is generally treated as an exchange because the lease extinguished is usually a capital asset.