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Exam 11: Property Dispositions

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Question 61

True/False

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The gain or loss realized on the sale of an asset is the amount realized less the adjustedbasis.

A) True
B) False

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Question 62

Multiple Choice

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Which of the following is not an involuntary conversion?

A) Fire damage.
B) A foreclosure.
C) Destruction caused by a hurricane.
D) Imminent domain.
E) All of the choices could be involuntary conversions.

F) D) and E)
G) C) and D)

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Question 63

Multiple Choice

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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?

Unrecaptured §1250 gain is taxed at a maximum rate of 25 percent.

§1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income.

Only accelerated depreciation is recaptured for §1245 assets.

The sale of computer equipment used in a trade or business for 9 months results in the following type of gain or loss?

Realized gains are recognized unless there is specific exception.

Collins Corporation, of Camden, Maine, wants to exchange its manufacturing equipment forRockland Company's equipment. Both parties agree that Collins' 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 toequalize the value exchanged but still allow the exchange to qualify as a like-kind exchange?

Which of the following does not ultimately result in a capital gain or loss?