Question 1

Accounts receivable and inventory are examples of ordinary assets.

Accepted Answer

A) True 
 B)False

Question 2

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

Accepted Answer

A) True 
 B)False

Question 3

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 thesE.For corporate taxpayers only,§291 recaptures 20% of the lesser of gain realized or accumulated depreciation on real property.F) B) and D)
G) B) and C)

Question 4

Which of the following is how gain or loss realized is calculated?

Accepted Answer

A)  Cash less selling costs.
B)  Cost basis less cost recovery.
C)  Cash less cost recovery.
D)  Amount realized less adjusted basis.
E)  None of thesE.Gain or loss realized is simply the amount realized less adjusted basis.F) A) and E)
G) A) and B)

Question 5

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the equipment a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

Accepted Answer

A)  $20,000 ordinary income under §1239.
B)  $10,000 ordinary gain and $10,000 §1231 gain.
C)  $20,000 ordinary gain.
D)  $20,000 capital gain.
E)  None of thesE.§1239 recharacterizes the entire gain as ordinary income when depreciable property is sold to a related party.F) A) and E)
G) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following sections does not currently recapture or recharacterize a taxpayer's gain?

Accepted Answer

A)  §1239.
B)  §1244.
C)  §1245.
D)  §1250.
E)  None of thesE.§1250 no longer applies since straight line depreciation is used for real property.F) A) and E)
G) A) and B)

Question 8

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

Accepted Answer

A) True 
 B)False

Exam 10: Property Dispositions

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the equipment a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

Correct Answer
verified

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

Correct Answer
verified

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

Correct Answer
verified

Which of the following sections does not currently recapture or recharacterize a taxpayer's gain?

Correct Answer
verified

Which of the following is how gain or loss realized is calculated?

Correct Answer
verified

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

Correct Answer
verified

Accounts receivable and inventory are examples of ordinary assets.

Correct Answer
verified

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

Correct Answer
verified

Exam 10: Property Dispositions

Alpha sold machinery,which it used in its business,to Beta,a related entity,for $40,000.Beta used the machinery in its business.Alpha bought the equipment a few years ago for $50,000 and has claimed $30,000 of depreciation expense.What is the amount and character of Alpha's gain?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Depreciation recapture changes both the amount and character of a gain.Depreciation recapture changes the character of the gain,not the amount.

Correct AnswerverifiedShow Answer

Which of the following sections does not currently recapture or recharacterize a taxpayer's gain?

Correct AnswerverifiedShow Answer

Which of the following is how gain or loss realized is calculated?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Accounts receivable and inventory are examples of ordinary assets.

Correct AnswerverifiedShow Answer

Ordinary gains and losses are obtained on the sale of investments.Capital gains and losses are obtained on the sale of investments.

Correct AnswerverifiedShow Answer

Correct Answer
verified

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