Question 1

Which of the following may qualify as an installment sale?

Accepted Answer

A)  Sale of inventory at a gain.
B)  Sale of securities.
C)  Sale of asset used in a business at a gain.
D)  Land sold at a loss.
E)  All of the choices qualify for installment sale treatment.F) A) and D)
G) A) and C)

Question 2

Suzanne,an individual,began business four years ago and has never sold a §1231 asset.Suzanne owned each of the assets for several years.In the current year,Suzanne sold the following business assets:
 $\begin{array}{lccc}
&&\text { Accumulated }\
\text {Asset}&\text { Original Cost } & \text { Depreciation } & {\text { Gain/Loss }} \
\text {Machinery}&\$ 12,000& \$ 7,000 & \$ 6,000 \
\text {Furniture}&10,000& 2,000 & (3,000) \
\text {Building}&90,000 & 20,000 &  15,000
\end{array}$ Assuming Suzanne's marginal ordinary income tax rate is 32 percent,what is the character of the gains and losses and what affect do they have on Suzanne's tax liability?

Accepted Answer

$6,000 ordinary gain,$12,000 unrecapture...

Question 3

A parcel of land is always a capital asset.

Accepted Answer

A) True 
 B)False

Question 4

Leesburg sold a machine for $2,200 on November 10ᵗʰ of the current year.The machine was purchased for $2,600.Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale.What is Leesburg's gain or loss realized on the machine?

Accepted Answer

A)  $800 gain.
B)  $1,000 gain.
C)  $1,200 loss.
D)  $1,400 loss.
E)  None of the choices are correct.F) A) and B)
G) D) and E)

Question 5

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 the choices are correct.F) B) and C)
G) None of the above

Question 6

Realized gains are recognized unless there is specific exception.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not usually included in an asset's tax basis?

Accepted Answer

A)  Purchase price
B)  Sales tax
C)  Shipping costs
D)  Installation costs
E)  None of the choices are correct.F) A) and D)
G) C) and D)

Question 8

Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Accepted Answer

A)  §291.
B)  §1239.
C)  §1245.
D)  Unrecaptured §1250 gains.
E)  None of the choices are correct.F) B) and D)
G) None of the above

Question 9

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 10

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Accepted Answer

A) True 
 B)False

Exam 10: Property Dispositions

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Correct Answer
verified

A parcel of land is always a capital asset.

Correct Answer
verified

Realized gains are recognized unless there is specific exception.

Correct Answer
verified

Which of the following may qualify as an installment sale?

Correct Answer
verified

Accounts receivable and inventory are examples of ordinary assets.

Correct Answer
verified

Which of the following is not usually included in an asset's tax basis?

Correct Answer
verified

Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Correct Answer
verified

Correct Answer
verified
$6,000 ordinary gain,$12,000 unrecapture...
View Answer

Leesburg sold a machine for $2,200 on November 10ᵗʰ of the current year.The machine was purchased for $2,600.Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale.What is Leesburg's gain or loss realized on the machine?

Correct Answer
verified

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

Correct Answer
verified

Exam 10: Property Dispositions

A loss realized for property destroyed in a hurricane is deferred under the involuntary conversion rules.

Correct AnswerverifiedShow Answer

A parcel of land is always a capital asset.

Correct AnswerverifiedShow Answer

Realized gains are recognized unless there is specific exception.

Correct AnswerverifiedShow Answer

Which of the following may qualify as an installment sale?

Correct AnswerverifiedShow Answer

Accounts receivable and inventory are examples of ordinary assets.

Correct AnswerverifiedShow Answer

Which of the following is not usually included in an asset's tax basis?

Correct AnswerverifiedShow Answer

Which of the following sections recaptures or recharacterizes only corporate taxpayer's gains?

Correct AnswerverifiedShow Answer

Correct Answerverified$6,000 ordinary gain,$12,000 unrecapture...View AnswerShow Answer

Leesburg sold a machine for $2,200 on November 10ᵗʰ of the current year.The machine was purchased for $2,600.Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale.What is Leesburg's gain or loss realized on the machine?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$6,000 ordinary gain,$12,000 unrecapture...
View Answer

Correct Answer
verified

Correct Answer
verified