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Exam 11: Property Dispositions

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Question 31

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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?

A) $9,500 §1221.
B) $9,500 §1231.
C) $9,500 §1245.
D) $9,500 §1250.
E) None of these.

F) C) and E)
G) C) and D)

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Question 32

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For a like-kind exchange, realized gain is deferred if the exchange is solely for like-kind property.

A) True
B) False

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Question 33

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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?

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

Which of the following is not used in the calculation of the amount realized?

The sale of land held for investment results in the following type of gain or loss?

The gain or loss realized on the sale of an asset is always recognized for tax purposes.

Which of the following may qualify as an installment sale?

Which of the following is not true regarding installment sales?

Sandra sold some equipment for $10,000 in cash, $1,000 of office products, the buyer assumption of her $1,500 loan, and incurred selling expenses of $500. What is the Sandra's amount realized in the transaction?

An installment sale is any sale where at least a portion of the sales proceeds is received in a subsequent taxable year.

The §1231 look-back rule recharacterizes §1231 gains if §1231 losses have created ordinary losses in the last 5 years.

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?

Reid had a business building destroyed in a fire. The old building was purchased for $375,000 and $60,000 of depreciation deductions had been taken. Although the old building had a fair market value of $425,000 at the time of the fire, his insurance proceeds were limited to $400,000. Reid found qualified replacement property which he acquired six months later for $390,000. What is the amount of Reid's realized gain and recognized gain?

Realized gains are recognized unless there is specific exception.

All tax gains and losses are ultimately characterized as either ordinary or capital.

Each of the following is true except for:

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?

The amount realized is the sale proceeds less the adjusted basis.