FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: Property Transactions: Capital Gains and Losses, 1231, and Recapture Provisions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Essay

Review LaterAdd Note

Review Later

A business machine purchased April 10, 2012, for $98,000 was fully depreciated in 2012 using § 179 immediate expensing. On August 15, 2014, the machine was sold for $67,000. What is the amount and nature of the gain or loss from disposition of the machine?

Correct Answer

verified

The machine was a § 1231 asset because i...

View Answer

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

For § 1245 recapture to apply, accelerated depreciation must have been taken on the property.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

Section 1245 depreciation recapture potential does not carryover from the deceased taxpayer to the beneficiary taxpayer.

Describe the circumstances in which the potential § 1245 depreciation recapture is extinguished.

Which of the following would be included in the netting of § 1231 gains and losses?

White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations. A few months after White places the machine in service, it discovers that the machine is not suitable for White's business. White had fully expensed the machine in the year of acquisition using § 179. White sells the machine for $60,000 in the tax year after it was acquired, but held the machine only for a total of 10 months. What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

Personal use property casualty gains and losses are not subject to the § 1231 rules.

Since the Code section that defines "capital asset" says what is not a capital asset, other Code sections have to help determine what is and what is not a capital gain or loss.

The possible holding periods for capital assets include:

In 2014, Satesh has $5,000 short-term capital loss, $13,000 0%/15%/20% long-term capital gain, and $7,000 qualified dividend income. Satesh is single and has other taxable income of $15,000. Which of the following statements is correct?

Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

Assume a building is subject to § 1250 depreciation recapture because § 168(k) was used to depreciate it. The building is destroyed in a hurricane and this is the taxpayer's only casualty or theft for the year. In which of the following situations could there be a § 1250 depreciation recapture gain?

Gold Company signs a 13-year franchise agreement with Silver. Silver retained significant powers, rights, and a continuing interest. Gold Company (the franchisee) makes noncontingent payments of $18,000 per year for the first four years of the franchise. Gold Company also pays a contingent fee of 2% of gross sales every month. Which of the following statements is correct?

Which of the following real property could be subject to § 1250 depreciation recapture?

"Collectibles" held long­term and sold at a gain are subject to maximum tax rate of 28%. An individual taxpayer recently sold an antique car for $40,000. The car had been held for several years and $30,000 was originally paid for it. Explain why the car is or is not a collectible.

Which of the following would extinguish the § 1245 recapture potential?

In 2014 Angela, a single taxpayer with no dependents, disposed of for $44,000 a business building which cost $100,000. $60,000 of depreciation had been taken on the building. Angela has a short-term capital loss of $3,000 this year. She has taxable income (not related to property transactions) of $125,000. She has no § 1231 lookback loss. What is the amount and nature of the gain or loss, what is Angela's taxable income, and what is her tax on the taxable income?

Depreciation recapture under § 1245 and § 1250 is reported on Form 4797.

For tax purposes, there is no original issue discount on a bond unless the bond is issued for less than its face value and the difference between the face value and the bond issue price is at least one-fourth of 1 percent of the redemption price at maturity multiplied by the number of years to maturity.

Hiram is a computer engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to practice. Hiram has a zero tax basis for the patent. In consideration of $800,000 plus a $1 royalty per device sold, Hiram assigns the patent to a computer manufacturing company. Hiram assigned all substantial rights in the patent. Which of the following is correct?