Question 1

Which of the following is true regarding depreciation recapture?

Accepted Answer

A)   Changes the character of a loss.
B)   Changes the character of a gain.
C)   Changes the amount of a gain.
D)   Only applies to ordinary assets.
E)   None of these.F) None of the above
G) C) and E)

Question 2

Which of the following does not ultimately result in a capital gain or loss?

Accepted Answer

A)   Sale of a personal use asset.
B)   Sale of inventory.
C)   Gain on equipment used in a trade or business held for more than one year, if it is the only asset sale during the year.
D)   Sale of capital stock in another company.
E)   None of these.F) A) and C)
G) A) and E)

Question 3

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

Accepted Answer

A)   $25,000 §1231 gain.
B)   $20,000 ordinary gain, and $5,000 §1231 gain.
C)   $5,000 ordinary gain, and $20,000 §1231 gain.
D)   $25,000 capital gain.
E)   None of these.F) B) and E)
G) B) and C)

Question 4

Redoubt LLC traded machinery used in its business to a machinery dealer for some new machinery. Redoubt originally purchased the machinery for $80,000 and it had an adjusted basis of $53,000 at the time of the exchange. The new machinery had a fair market value of $62,000. Redoubt also received $7,000 of computer equipment in the transaction. What is Redoubt's gain or loss recognized on the exchange?

Accepted Answer

The answer of Redoubt LLC traded machinery used in its...

Question 5

Which of the following results in an ordinary gain or loss?

Accepted Answer

A)   Sale of a machine at a gain.
B)   Sale of stock held for investment.
C)   Sale of a §1231 asset.
D)   Sale of inventory.
E)   None of these.F) A) and B)
G) C) and D)

Question 6

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Accepted Answer

A) True 
 B)False

Question 7

A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following transactions results solely in §1245 gain?

Accepted Answer

A)   Sale of machinery held for less than one year.
B)   Sale of machinery held for more than one year and where the gain realized exceeds the accumulated depreciation.
C)   Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized.
D)   Sale of land held for more than one year and where the amount realized exceeds the adjusted basis.
E)   None of these.F) B) and D)
G) C) and D)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Unrecaptured §1250 gain is taxed at a maximum rate of 25 percent.

Accepted Answer

A) True 
 B)False

Exam 10: Property Dispositions

Which of the following transactions results solely in §1245 gain?

Correct Answer
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Unrecaptured §1250 gain is taxed at a maximum rate of 25 percent.

Correct Answer
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Correct Answer
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Which of the following results in an ordinary gain or loss?

Correct Answer
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Which of the following does not ultimately result in a capital gain or loss?

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

Correct Answer
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Which of the following is true regarding depreciation recapture?

Correct Answer
verified

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

Correct Answer
verified

A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

Correct Answer
verified

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Correct Answer
verified

Exam 10: Property Dispositions

Which of the following transactions results solely in §1245 gain?

Correct AnswerverifiedShow Answer

Unrecaptured §1250 gain is taxed at a maximum rate of 25 percent.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following results in an ordinary gain or loss?

Correct AnswerverifiedShow Answer

Which of the following does not ultimately result in a capital gain or loss?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true regarding depreciation recapture?

Correct AnswerverifiedShow Answer

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

Correct AnswerverifiedShow Answer

A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

Correct AnswerverifiedShow Answer

For corporations, §291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income.

Correct AnswerverifiedShow Answer

Correct Answer
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