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Chapter 10 Property Dispositions

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Question;Chapter 10;Property Dispositions;True / False Questions;1. The;amount realized is the sale proceeds less the adjusted basis.;True False;2. Generally;the amount realized is everything of value received in a sale less selling;expenses.;True False;3. The;adjusted basis is the cost basis less cost recovery deductions.;True False;4. An;asset's tax adjusted basis is usually greater than its book adjusted basis.;True False;5. The gain;or loss realized is the amount realized less the adjusted basis.;True False;6. The gain;or loss realized is always recognized for tax purposes.;True False;7. All tax;gains and losses are ultimately characterized as either ordinary or capital.;True False;8. Ordinary;gains and losses are obtained on the sale of investments.;True False;9. Accounts;receivable and inventory are examples of ordinary assets.;True False;10. Assets;held for investment and personal use assets are examples of capital assets.;True False;11. ?1231;assets include all assets used in a trade or business.;True False;12. A parcel;of land is always a capital asset.;True False;13. Taxpayers;can recognize a taxable gain even though an asset's real economic value has;declined.;True False;14. After;application of the look-back rule, net ?1231 gains become capital while net;?1231 losses become ordinary.;True False;15. Depreciation;recapture changes both the amount and character of a gain.;True False;16. Only;accelerated depreciation is recaptured for ?1245 assets.;True False;17. ?1250;recaptures the excess of accelerated depreciation over straight line;depreciation on real property placed in service between 1981 and 1986 as;ordinary income.;True False;18. For;corporations, ?291 recaptures 20 percent of the lesser of depreciation taken or;the realized gain as ordinary income.;True False;19. Unrecaptured;?1250 gain is taxed at a maximum rate of 25 percent.;True False;20. Unrecaptured;?1250 gains apply only to individuals.;True False;21. ?1239;recharacterizes 50 percent of the gain on sales to a related party as ordinary;income.;True False;22. A net;?1231 gain becomes ordinary while a net ?1231 loss becomes long-term capital;gain.;True False;23. The ?1231;look-back rule recharacterizes ?1231 gains if ?1231 losses have created;ordinary losses in the last 5 years.;True False;24. The ?1231;look-back rule applies whether there is a net gain or loss.;True False;25. Realized;gains are recognized unless there is specific exception.;True False;26. For a;like-kind exchange, realized gain is deferred if the exchange is solely for;like-kind property.;True False;27. Residential;real property is not like-kind with non-residential real property.;True False;28. A;simultaneous exchange must take place for a transaction to qualify as a;like-kind exchange.;True False;29. Boot is;not like-kind property involved in a like-kind exchange.;True False;30. In a;deferred like-kind exchange the like-kind property to be received must be;identified within 45 days and acquired within 180 days from the initial;exchange.;True False;31. A taxpayer;that receives boot in a like-kind exchange resulting in a gain recognizes as;gain the lesser of the fair market value of the boot received or the gain;realized.;True False;32. A loss;realized for property destroyed in a hurricane is deferred under the;involuntary conversion rules.;True False;33. An;installment sale is any sale where at least a portion of the sales proceeds is;recognized in a subsequent taxable year.;True False;34. For an;installment sale, the gross profit percentage is the gain recognized divided by;the gain realized.;True False;35. Losses on;sales between related parties are realized but not recognized.;True False;Multiple Choice Questions;36. Which of;the following is not used in the calculation of the amount realized?;A. Cash.;B. Adjusted;basis.;C. Fair market;value of other property received.;D. Buyer's;assumption of liabilities.;E. All of;these.;37. Which of;the following is not true regarding an asset's adjusted basis?;A. Tax;adjusted basis is usually greater than book adjusted basis.;B. Tax;adjusted basis is usually less than book adjusted basis.;C. Adjusted;basis is cost basis less cost recovery deductions.;D. Tax;adjusted basis may change over time.;38. Which of;the following is not usually included in an asset's tax basis?;A. Purchase;price;B. Sales tax;C. Shipping;costs;D. Installation;costs;E. None of;these;39. Which of;the following is how gain or loss realized is calculated?;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.;40. Which of;the following realized gains results in a recognized gain?;A. Farm;machinery traded for farm machinery.;B. Sale to a;related party.;C. Involuntary;conversion.;D. Iowa;cropland exchanged for a Minnesota warehouse.;41. 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?;A. $800;gain.;B. $1,000;gain.;C. $1,200;loss.;D. $1,400;loss.;E. None of;these.;42. The sale;of land held for investment results in the following type of gain or loss?;A. Capital.;B. Ordinary.;C. ?1231.;D. ?1245.;E. None of;these.;43. 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?;A. Capital.;B. ?291.;C. ?1231.;D. ?1245.;E. None of;these.;44. The sale;of computer equipment used in a trade or business for 9 months results in the;following type of gain or loss?;A. Capital.;B. Ordinary.;C. ?1231.;D. ?1245.;E. None of;these.;45. The sale;of machinery for more than the original cost basis (before depreciation), used;in a trade or business, and held for more than one year results in the;following types of gain or loss?;A. Capital;and Ordinary.;B. Ordinary;only.;C. Capital;and ?1231.;D. ?1245 and;?1231.;E. None of;these.;46. Which of;the following results in an ordinary gain or loss?;A. Sale of a;machine at a gain.;B. Sale of;stock held for investment.;C. Sale of a;?1231 asset.;D. Sale of;inventory.;E. None of;these.;47. What is;the character of land used in an active trade or business for two years?;A. Capital.;B. Ordinary.;C. ?1231.;D. Investment.;E. None of;these.;48. Which of;the following is true regarding depreciation recapture?;A. Changes;the character of a loss.;B. Changes;the character of a gain.;C. Changes;the amount of a gain.;D. Only;applies to ordinary assets.;E. None of;these.;49. Which of;the following gains does not result solely in an ordinary gain or loss?;A. Sale of;equipment held for less than a year.;B. Sale of;inventory.;C. Sale of;equipment where the gain realized exceeds the accumulated depreciation.;D. Sale of;equipment where the accumulated depreciation exceeds the gain realized.;E. None of;these.;50. Which of;the following is not a ?1245 asset if held for more than one year?;A. Machinery.;B. Automobile.;C. Building;purchased in 1985 for which accelerated depreciation was elected.;D. Land.;E. None of;these.;51. Which of;the following does not ultimately result in a capital gain or loss?;A. Sale of a;personal use asset.;B. Sale of;inventory.;C. Gain on;equipment used in a trade or business held for more than one year, if it is the;only asset sale during the year.;D. Sale of;capital stock in another company.;E. None of;these.;52. 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.;53. Butte sold;a machine to a machine dealer for $50,000. Butte bought the machine for $55,000;several years ago and has claimed $12,500 of depreciation expense on the;machine. What is the amount and character of Butte's gain or loss?;A. $7,500;?1231 loss.;B. $5,000;?1231 loss.;C. $7,500;ordinary gain.;D. $7,500;capital gain.;E. None of;these.;54. Which of;the following sections does not recapture or recharacterize a taxpayer's gain?;A. ?1239.;B. ?1244.;C. ?1245.;D. ?291.;E. None of;these.;55. Which of;the following sections recaptures or recharacterizes only corporate taxpayer's;gains?;A. ?291.;B. ?1239.;C. ?1245.;D. Unrecaptured;?1250 gains.;E. None of;these.;56. Which of;the following transactions results solely in ?1245 gain?;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;these.;57. Bozeman sold;equipment that it uses in its business for $80,000. Bozeman bought the;equipment two years ago for $75,000 and has claimed $20,000 of depreciation;expense. What is the amount and character of Bozeman's gain or loss?;A. $25,000;?1231 gain.;B. $20,000;ordinary gain, and $5,000 ?1231 gain.;C. $5,000;ordinary gain, and $20,000 ?1231 gain.;D. $25,000;capital gain.;E. None of;these.;58. Sumner;sold equipment that it uses in its business for $30,000. Sumner bought the;equipment a few years ago for $80,000 and has claimed $40,000 of depreciation;expense. Assuming that this is Sumner's only disposition during the year, what;is the amount and character of Sumner's gain or loss?;A. $10,000;?1231 loss.;B. $10,000;?1245 loss.;C. $50,000;ordinary loss.;D. $10,000;capital loss.;E. None of;these.;59. 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?;A. $40,000;ordinary and $360,000 ?1231 gain.;B. $200,000;ordinary and $200,000 ?1231 gain.;C. $400,000;ordinary gain.;D. $400,000;capital gain.;E. None of;these.;60. Brad sold;a rental house that he owned for $250,000. Brad bought the rental house five;years ago for $225,000 and has claimed $50,000 of depreciation expense. What is;the amount and character of Brad's gain or loss?;A. $25,000;ordinary and $50,000 unrecaptured ?1250 gain.;B. $25,000;?1231 gain and $50,000 unrecaptured ?1250 gain.;C. $75,000;ordinary gain.;D. $75,000;capital gain.;E. None of;these.;61. Why does;?1250 recapture generally no longer apply?;A. Congress;repealed the code section.;B. The Tax;Reform Act of 1986 changed the depreciation of real property to the;straight-line method.;C. ?1245;recapture trumps ?1250 recapture.;D. Because;unrecaptured ?1250 gains now apply to all taxpayers instead.;E. None of;these.;62. When does;unrecaptured ?1250 gains apply?;A. When the;taxpayer makes the election.;B. It;applies only when non-corporate taxpayers sell depreciable real property at a;gain.;C. It;applies when ?1245 recapture trumps ?1250 recapture.;D. It;applies only when real property purchased before 1986 is sold at a gain.;E. None of;these.;63. 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?;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.;64. Brandon;an individual, began business four years ago and has never sold a ?1231 asset.;Brandon owned each of the assets for several years. In the current year;Brandon sold the following business assets;Assuming Brandon's marginal ordinary income tax rate is 35;percent, what effect do the gains and losses have on Brandon's tax liability?;A. $7,000;ordinary income, $1,000 ?1231 loss and $2,100 tax liability.;B. $6,000;ordinary income and $2,100 tax liability.;C. $7,000;?1231 gain and $2,450 tax liability.;D. $7,000;?1231 gain and $1,050 tax liability.;E. None of;these.;65. Brandon;an individual, began business four years ago and has sold ?1231 assets with;$5,000 of losses within the last 5 years. Brandon owned each of the assets for;several years. In the current year, Brandon sold the following business assets;Assuming Brandon's marginal ordinary income tax rate is 35;percent, what effect do the gains and losses have on Brandon's tax liability?;A. $25,000;ordinary income, $8,750 tax liability.;B. $25,000;?1231 gain and $3,750 tax liability.;C. $13,000;?1231 gain, $12,000 ordinary income, and $6,150 tax liability.;D. $12,000;?1231 gain, $13,000 ordinary income, and $6,350 tax liability.;E. None of;these.;66. 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?;A. $0.;B. $45,000.;C. $60,000.;D. $105,000.;E. None of;these.;67. Winchester;LLC sold the following business assets during the current year: (1) automobile;$30,000 cost basis, $12,000 depreciation, proceeds $20,000, (2) machinery;$25,000 cost basis, $20,000 depreciation, proceeds $10,000, (3) furniture;$15,000 cost basis, $10,000 depreciation, proceeds $4,000, (4) computer;equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000, (5);Winchester had unrecaptured ?1231 losses of $3,000 in the prior 5 years. What;is the amount and character of Winchester's gains and losses before the 1231;netting process?;A. $3,000;ordinary loss, $0 ?1231 loss.;B. $7,000;ordinary gain, $10,000 ?1231 loss.;C. $7,000;ordinary loss, $4,000 ?1231 gain.;D. $1,000 ordinary;gain, $4,000 ?1231 loss.;E. None of;these.;68. Which of;the following is true regarding the ?1231 look-back rule?;A. It only;applies when a ?1231 loss occurs.;B. It only;applies when a ?1231 gain occurs.;C. It only;applies when a ?1231 gain occurs and there is a nonrecaptured ?1231 loss in the;prior five years.;D. It only;applies when a ?1231 gain occurs and there is a nonrecaptured ?1231 gain in the;prior five years.;E. None of;these.;69. Which of;the following is not true regarding ?1239?;A. It only;applies to related taxpayers.;B. It only;applies to gains on sales of depreciable property.;C. It only;applies to gains on sales of non-residential real property.;D. It does;not apply to losses.;E. None of;these.;70. Koch;traded machine 1 for machine 2. Koch originally purchased machine 1 for $75,000;and machine 1's adjusted basis was $40,000 at the time of the exchange. Machine;2's seller purchased it for $65,000 and machine 2's adjusted basis was $55,000;at the time of the exchange. What is Koch's adjusted basis in machine 2 after;the exchange?;A. $40,000.;B. $50,000.;C. $55,000.;D. $75,000.;E. None of;these.;71. Mary;traded furniture used in her business to a furniture dealer for some new;furniture. Mary originally purchased the furniture for $45,000 and it had an;adjusted basis of $20,000 at the time of the exchange. The new furniture had a;fair market value of $40,000. Mary also gave $4,000 to the dealer in the;transaction. What is Mary's adjusted basis in the new furniture after the;exchange?;A. $20,000.;B. $24,000.;C. $36,000.;D. $40,000.;E. None of;these.;72. Which one;of the following is not considered boot in a like-kind exchange?;A. Cash.;B. Other;property.;C. Mortgage;given.;D. Mortgage;received.;E. All of;these.;73. Which one;of the following is not true regarding a like-kind exchange?;A. Loss on;like-kind property is not recognized.;B. Gains on;boot given are deferred.;C. Losses on;boot given are not recognized.;D. Securities;can be like-kind with any other securities.;E. All of;these.;74. Which one;of the following is not a requirement of a deferred like-kind exchange?;A. The;like-kind property to be received must be identified within 45 days.;B. The;exchange must be completed within the taxable year.;C. The;like-kind property must be received within 180 days.;D. A third;party intermediary is often used to facilitate the exchange.;E. All of;these.;75. How long;does a taxpayer have to identify replacement property in a like-kind exchange?;A. The;like-kind property to be received must be identified within 45 days.;B. The;like-kind property to be received must be identified by the earlier of 45 days;or the last day of the taxpayer's taxable year.;C. The;like-kind property to be received must be identified within 180 days.;D. There is;no deadline for the identification of replacement property.;E. All of;these.;76. The;general rule regarding the exchanged basis in a like-kind exchange is;A. The basis;is equal to the fair market value of the new property.;B. The basis;is equal to the fair market value of the old property.;C. The basis;is equal to the adjusted basis of the old property.;D. The basis;is equal to the cost basis of the old property.;E. All of;these.;77. What is;the primary purpose of a third-party intermediary in a deferred like-kind;exchange?;A. To;facilitate finding replacement property.;B. To help;acquire the replacement property.;C. To;prevent the seller from receiving cash (boot) that will taint the transaction.;D. To certify;the taxpayer's Form 8824.;E. All of;these.;78. Arlington;LLC traded machinery used in its business to a machinery dealer for some new;machinery. Arlington originally purchased the machinery for $60,000 and it had;an adjusted basis of $28,000 at the time of the exchange. The new machinery had;a fair market value of $35,000. Arlington also received $2,000 of office;equipment in the transaction. What is Arlington's gain or loss recognized on;the exchange?;A. $0.;B. $2,000.;C. $7,000.;D. $9,000.;E. None of;these.;79. Each of;the following is true except for;A. A direct;involuntary conversion occurs when property taken under imminent domain is;replaced with other property.;B. Qualified;replacement property rules are more restrictive than the like-kind property;rules.;C. An;indirect involuntary conversion occurs when property is destroyed and insurance;proceeds are used to purchase qualified replacement property.;D. Losses;realized in involuntary conversions are deferred.;E. All of;these are true.;80. Which of;the following is not an involuntary conversion?;A. Destruction;caused by a hurricane.;B. Imminent;domain.;C. A;foreclosure.;D. Fire;damage.;E. All of;these are involuntary conversions.;81. Which of;the following may qualify as an installment sale?;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;these are true.;82. Pelosi;Corporation sold a parcel of land valued at $300,000. Its basis in the land was;$250,000. For the land, Pelosi received $150,000 in cash in the current year;and a note providing Pelosi with $150,000 in the subsequent year. What is;Pelosi's recognized gain in the current and subsequent year, respectively?;A. $0;$50,000.;B. $10,000;$40,000.;C. $25,000;$25,000.;D. $50,000;$0.;E. None of;these.;83. Which of;the following is not true regarding installment sales?;A. Only;gains are eligible for installment sale reporting.;B. Depreciation;recapture is deferred in an installment sale.;C. The gross;profit percentage is needed to determine the annual gain recognized.;D. Stock;sales are ineligible for installment sale treatment.;E. None of;these.;84. Which of;the following is true regarding disallowed losses between related taxpayers?;A. The tax;laws essentially treat related parties as the same taxpayer.;B. The;holding period of the related person begins over.;C. The;related person always receives a carryover basis.;D. The;seller's realized loss is deferred until the buyer sells the assets.;E. None of;these.;85. Sadie sold;10 shares of stock to her brother, George, for $500 six months ago. Sadie had;purchased the stock for $600 two years earlier. If George sells the stock for;$700, what is the amount and character of his recognized gain or loss in the;current year?;A. $0.;B. $100;short-term capital gain.;C. $100;long-term capital gain.;D. $200;short-term capital gain.;E. None of;these.;Essay Questions;86. 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?;87. Manassas;purchased a computer several years ago for $2,200. On November 10th of the;current year, the computer was worth $800. If $1,000 of depreciation deductions;had been taken, what is Manassas' tax adjusted basis for the computer?;88. Bull Run;sold a computer for $1,200 on November 10th 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?;89. Explain whether;the sale of a machine used in a trade or business that is sold at a loss;generates an ordinary or capital loss?;90. Andrea;sold a piece of machinery she used in her business for 9 months. The amount;realized was $50,000 and the adjusted basis was $55,000. What is Andrea's gain;or loss realized and what is the character of the gain or loss?;91. Jessie sold;a piece of land held for investment for $250,000. Jessie bought the land two;years ago for $195,000. What is the amount and character of Jessie's gain?;92. 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?;93. Alexandra;sold equipment that she uses in her business for $100,000. Alexandra bought the;equipment two years ago for $90,000 and has claimed $25,000 of depreciation;expense. What is the amount and character of Alexandra's gain or loss?;94. Frederique;sold furniture that she uses in her business for $15,000. Frederique bought the;furniture a few years ago for $40,000 and has claimed $20,000 of depreciation;expense. What is the amount and character of Frederique's gain or loss?;95. Buzz;Corporation sold an office building that it used in its business for $500,000.;Buzz bought the building ten years ago for $650,000 and has claimed $200,000 of;depreciation expense. What is the amount and character of Buzz's gain or loss?;96. Brandy;sold a rental house that she owned for $150,000. Brandy bought the house four;years ago for $140,000 and has claimed $25,000 of depreciation expense. What is;the amount and character of Brandy's gain or loss?;97. Silver sold;machinery to Gold, a related entity, which it used in its business for $55,000.;Silver bought the equipment a few years ago for $50,000 and has claimed $15,000;of depreciation expense. What is the amount and character of Silver's gain?;98. Andrew, an;individual, began business four years ago and has never sold a ?1231 asset.;Andrew owned each of the assets for several years. In the current year, Andrew;sold the following business assets;Assuming Andrew's marginal ordinary income tax rate is 30;percent, what is the character of the gains and losses and what affect do they;have on Andrew's tax liability?;99. 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;Assuming Suzanne's marginal ordinary income tax rate is 35;percent, what is the character of the gains and losses and what affect do they;have on Suzanne's tax liability?;100. Gainesville;LLC sold the following business assets during the current year: (1) machinery;$20,000 cost basis, $4,000 depreciation, proceeds $22,000, (2) automobile;$15,000 cost basis, $12,000 depreciation, proceeds $7,000, (3) equipment;$15,000 cost basis, $10,000 depreciation, proceeds $4,000, (4) computer;equipment, $35,000 cost basis, $16,000 depreciation, proceeds $15,000, (5);Winchester had unrecaptured ?1231 losses of $5,000 in the prior 5 years. What;is the amount and character of Winchester's gains and losses before the 1231;netting process?;101. Collins;Corporation, of Camden, Maine, wants to exchange its manufacturing equipment;for Rockland Company's equipment. Both parties agree that Collins's machinery;is worth $200,000 and that Rockland's machinery is worth $175,000. Collins will;not enter into the transaction unless it qualifies as a like-kind exchange. If;Collins wants to avoid gain, what could the parties do to equalize the value;exchanged but still allow the exchange to qualify as a like-kind exchange?;102. Odintz;traded machinery for machinery. Odintz originally purchased its machine for;$150,000 and the adjusted basis was $90,000 at the time of the exchange. The;machinery received was purchased for $200,000, had an adjusted basis of;$155,000 at the time of the exchange, and was subject to a mortgage of $50,000;that was paid off before the transfer. What is Odintz's adjusted basis in the;new machinery after the exchange?;103. Misha;traded computer equipment used in her business to a computer dealer for some;new computer equipment. Misha originally purchased the computer equipment for;$15,000 and it had an adjusted basis of $11,000 at the time of the exchange.;Misha also received a used copier worth $2,000 in the transaction. What is;Misha's adjusted basis in the new equipment after the exchange?;104. Tyson had a;parcel of undeveloped investment land that he wanted to trade for a warehouse;to be used in his business. He found a buyer willing to pay him $450,000 for;the land. He transferred the land to a third party intermediary on April 1st of;the current year. On May 10th, with the help of a commercial real estate agent;Tyson identified two suitable warehouses. On August 10th he made an offer on;the first building which was rejected. On August 13th an offer was accepted on;the second warehouse. On September 23rd the third party intermediary;transferred $500,000 ($450,000 from the original property plus $50,000 from;Tyson) to the seller and conveyed title to the warehouse to Tyson. Explain;whether the exchange of property qualifies as a like-kind exchange.;105. Redoubt LLC;traded machinery used in its business to a machinery dealer for some new;machinery. Redoubt originally purchased the machinery for $80,000 and it had an;adjusted basis of $53,000 at the time of the exchange. The new machinery had a;fair market value of $62,000. Redoubt also received $7,000 of computer;equipment in the transaction. What is Redoubt's gain or loss recognized on the;exchange?;106. 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?;107. Kristi had;a business building destroyed in an earthquake. The old building was purchased;for $250,000 and $80,000 of depreciation deductions had been taken. Her;insurance proceeds were $550,000. Although the replacement property was much;larger and nicer than her old building, Kristi's new property qualified as;replacement property. She acquired the new property 13 months after the;earthquake for $620,000. What is the amount of Kristi's realized gain and;recognized gain and the basis in her new property?;108. Luke sold;land valued at $210,000. His original basis in the land was $180,000. For the;land, Luke received $60,000 in cash in the current year and a note providing;$150,000 in the subsequent year. What is Luke's recognized gain in the current;and subsequent year, respectively?;109. In the;current year, Raven sold machinery with a fair market value of $200,000. The;machinery's original basis was $190,000 and Raven's accumulated depreciation on;the machinery was $40,000, so its adjusted basis to Raven was $150,000. Raven;received $50,000 in the current year and a note paying Raven $75,000 a year for;two years beginning in next year. What is the amount and character of the gain;that Raven will recognize in the current year?;110. Sarah sold;1,000 shares of stock to her brother, David, for $18,000 last year. Sarah had;purchased the stock for $20,000 several years earlier. What is the amount and;character of David's recognized gain or loss in the current year if he sells;the stock for $15,000 and $25,000, respectively?

 

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