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| 1 | |
An asset's tax adjusted basis is usually less than its book adjusted basis. |
| | A) | True |
| | B) | False |
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| 2 | |
Tax gain or loss realized is generally recognized for tax purposes. |
| | A) | True |
| | B) | False |
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| 3 | |
Property held for investment and inventory are examples of capital assets. |
| | A) | True |
| | B) | False |
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| 4 | |
A parcel of land used in a trade or business is a capital asset. |
| | A) | True |
| | B) | False |
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| 5 | |
Section 1239 recharacterizes gain on the sale of depreciable property to related party as ordinary income. |
| | A) | True |
| | B) | False |
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| 6 | |
In a deferred like-kind exchange the like-kind property to be received must be identified within 60 days and acquired within 200 days from the initial exchange. |
| | A) | True |
| | B) | False |
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| 7 | |
An installment sale is any sale where at least a portion of the sales proceeds are recognized in a subsequent taxable year. |
| | A) | True |
| | B) | False |
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| 8 | |
Which of the following is used in the calculation of the amount realized: |
| | A) | Cash given. |
| | B) | Liabilities assumed by seller. |
| | C) | Fair market value of other property received. |
| | D) | Accumulated depreciation. |
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| 9 | |
Which of the following realized gains results in a recognized gain? |
| | A) | Computer equipment traded for computer equipment. |
| | B) | Los Angeles office building for Nebraska farm land. |
| | C) | Sale to a related party at a gain. |
| | D) | Residential rental property destroyed in a hurricane. |
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| 10 | |
Which of the following results in an ordinary gain or loss? |
| | A) | Sale of a machine held for six months at a gain. |
| | B) | Sale of stock held for investment. |
| | C) | Sale of a section 1231 asset. |
| | D) | Sale of land used in a business for three years. |
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| 11 | |
Which of the following is true regarding depreciation recapture? |
| | A) | Changes the character of a loss. |
| | B) | The lesser of accumulated depreciation or gain recognized becomes ordinary. |
| | C) | Changes the amount of a gain. |
| | D) | Only applies to ordinary assets. |
| | E) | None of the above. |
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| 12 | |
Kimberly sold equipment that it uses in her business for $50,000. Kimberly bought the equipment two years ago for $60,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Kimberly's gain or loss? |
| | A) | $30,000 section 1231 gain. |
| | B) | $20,000 ordinary gain. |
| | C) | $5,000 ordinary gain, and $15,000 section 1231 gain. |
| | D) | $20,000 capital gain. |
| | E) | None of the above. |
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| 13 | |
Erika Corporation sold an office building that it used in its business for $600,000. Erika bought the building ten years ago for $400,000 and has claimed $100,000 of depreciation expense. What is the amount and character of Erika's gain or loss? |
| | A) | $20,000 ordinary and $280,000 section 1231 gain. |
| | B) | $100,000 ordinary and $200,000 section 1231 gain. |
| | C) | $300,000 ordinary gain. |
| | D) | $300,000 capital gain. |
| | E) | None of the above. |
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| 14 | |
Which of the following is true regarding section 1239? |
| | A) | It only applies to sales between unrelated taxpayers. |
| | B) | It only applies to gains on sales of capital gain property. |
| | C) | It only applies to gains on sales of depreciable property between related taxpayers. |
| | D) | It only applies to sales of non-residential property. |
| | E) | None of the above. |
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| 15 | |
Baker traded furniture used in her business to a furniture dealer for some new furniture. Baker originally purchased the furniture for $50,000 and it had an adjusted basis of $30,000 at the time of the exchange. The new furniture had a fair market value of $35,000. Baker also gave $5,000 to the dealer in the transaction. What is Baker's adjusted basis in the new furniture after the exchange? |
| | A) | $30,000. |
| | B) | $34,000. |
| | C) | $35,000. |
| | D) | $40,000. |
| | E) | None of the above. |
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