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Exam 10: Property Dispositions

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Question 51

True/False

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§1250 recaptures the excess of accelerated depreciation over straight-line depreciation on real property placed in service before 1987 as ordinary income.

A) True
B) False

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Question 52

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

A) Tax adjusted basis is usually greater than book adjusted basis.
B) Tax adjusted basis is usually less than book adjusted basis.
C) Adjusted basis is cost basis less cost recovery deductions.
D) Tax adjusted basis may change over time.

E) A) and B)
F) A) and C)

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Question 53

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§1231 assets include all assets used in a trade or business.

Foreaker LLC sold a piece of land that it uses in its business for $52,000.Foreaker bought the land two years ago for $42,500.What is the amount and character of Foreaker's gain?

Ordinary gains and losses are obtained on the sale of investments.

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

Boot is not like-kind property involved in a like-kind exchange.

Depreciation recapture changes both the amount and character of a gain.

Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

Luke sold land valued at $210,000.His original basis in the land was $180,000.For the land,Luke received $60,000 in cash in the current year and a note providing $150,000 in the subsequent year.What is Luke's recognized gain in the current and subsequent year,respectively?

Losses on sales between related parties are realized but not recognized.

Bateman Corporation sold an office building that it used in its business for $800,000.Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense.What is the amount and character of Bateman's gain or loss?

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

Frederique sold furniture that she uses in her business for $15,000.Frederique bought the furniture a few years ago for $40,000 and has claimed $20,000 of depreciation expense.What is the amount and character of Frederique's gain or loss?

Residential real property is not like-kind with non-residential real property.

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

Sunshine LLC sold furniture for $75,000.Sunshine bought the furniture for $90,000 several years ago and has claimed $25,000 of depreciation expense on the machine.What is the amount and character of Sunshine's gain or loss?

Koch traded machine 1 for machine 2 when the fair market value of both machines was $50,000.Koch originally purchased machine 1 for $75,000 and machine 1's adjusted basis was $40,000 at the time of the exchange.Machine 2's seller purchased it for $65,000 and machine 2's adjusted basis was $55,000 at the time of the exchange.What is Koch's adjusted basis in machine 2 after the exchange?

The sale of machinery for more than the original cost basis (before depreciation) ,used in a trade or business,and held for more than one year results in the following types of gain or loss?

Which one of the following is not a requirement of a deferred like-kind exchange?