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Exam 11: Property Dispositions

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Question 61

Multiple Choice

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Arlington LLC exchanged land used in its business for some new land.Arlington originally purchased the land it exchanged for $28,000.The new land had a fair market value of $35,000.Arlington also received $2,000 of office equipment in the transaction.What is Arlington's recognized gain or loss on the exchange?

A) $0.
B) $2,000.
C) $7,000.
D) $9,000.
E) None of the choices are correct.

F) C) and D)
G) None of the above

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Question 62

Multiple Choice

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A deferred like-kind exchange does not help accomplish which of the following objectives?

A) To facilitate finding replacement property.
B) To help acquire the replacement property.
C) To reduce the possibility that the seller must receive cash (boot) that will taint the transaction.
D) To certify the taxpayer's Form 8824-Like-kind exchanges.
E) All of the choices are correct.

F) B) and D)
G) All of the above

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Question 63

True/False

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

Ashburn reported a $105,000 net §1231 gain in Year 6.Assuming Ashburn reported $60,000 of nonrecaptured §1231 losses during Years 1-5,what amount of Ashburn's net §1231 gain for Year 6,if any,is treated as ordinary income?

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

Peroni Corporation sold a parcel of land valued at $300,000.Its basis in the land was $250,000.For the land,Peroni received $150,000 in cash in the current year and a note providing Peroni with $150,000 in the subsequent year.What is Peroni's recognized gain in the current and subsequent year,respectively?

An asset's tax-adjusted basis is usually greater than its book-adjusted basis.

Bull Run sold a computer for $1,200 on November 10^th of the current year.The computer was purchased for $2,800.Bull Run had taken $1,000 of depreciation deductions.What is Bull Run's gain or loss realized on the computer?

Redoubt LLC exchanged an office building used in its business for a rental house.Redoubt originally purchased the building for $80,000,and it had an adjusted basis of $53,000 at the time of the exchange.The rental house had a fair market value of $62,000.Redoubt also received $7,000 of cash in the transaction.What is Redoubt's gain or loss recognized on the exchange? What is Redoubt's basis in the rental house?

Accounts receivable and inventory are examples of ordinary assets.