Question 1

Property sold to a related party that is depreciable by the purchaser may cause the seller to have ordinary gain.

Accepted Answer

A) True 
 B)False

Question 2

A lease cancellation payment received by a lessee is generally treated as an exchange because the lease extinguished is usually a capital asset.

Accepted Answer

A) True 
 B)False

Question 3

The effect of § 1244 may be to convert a capital loss into an ordinary loss deductible for adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 4

Red Company had an involuntary conversion on December 23, 2018. The machinery had been acquired on April 1, 2016, for $49,000 and its adjusted basis was $14,200. The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it. This was Red's only casualty or theft event for the year. As a result of this event, Red initially has:

Accepted Answer

A)   $10,000 § 1231 loss.
B)   $10,000 § 1245 recapture gain.
C)   $4,200 casualty loss.
D)   $4,200 § 1231 loss.
E)   None of the above.F) B) and C)
G) A) and E)

Question 5

Which of the following assets held by a manufacturing business is a § 1231 asset?

Accepted Answer

A)   Inventory.
B)   Office furniture used in the business and held less than one year.
C)   A factory building used in the business and held more than one year.
D)   Accounts receivable.
E)   All of the above.F) A) and D)
G) A) and E)

Question 6

A business machine purchased April 10, 2016, for $98,000 was fully depreciated in 2016 using § 179 immediate expensing. On August 15, 2018, the machine was sold for $67,000. What is the amount and nature of the gain or loss from disposition of the machine?

Accepted Answer

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

Question 7

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017. For 2018, Vertical's net § 1231 gain is treated as:

Accepted Answer

A)   $45,000 long-term capital gain and $22,000 ordinary loss.
B)   $67,000 ordinary gain.
C)   $45,000 long-term capital gain and $22,000 ordinary gain.
D)   $67,000 capital gain.
E)   None of the above.F) A) and E)
G) A) and B)

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

The effect of § 1244 may be to convert a capital loss into an ordinary loss deductible for adjusted gross income.

Correct Answer
verified

A business machine purchased April 10, 2016, for $98,000 was fully depreciated in 2016 using § 179 immediate expensing. On August 15, 2018, 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

A lease cancellation payment received by a lessee is generally treated as an exchange because the lease extinguished is usually a capital asset.

Correct Answer
verified

Property sold to a related party that is depreciable by the purchaser may cause the seller to have ordinary gain.

Correct Answer
verified

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017. For 2018, Vertical's net § 1231 gain is treated as:

Correct Answer
verified

Which of the following assets held by a manufacturing business is a § 1231 asset?

Correct Answer
verified

Correct Answer
verified

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

The effect of § 1244 may be to convert a capital loss into an ordinary loss deductible for adjusted gross income.

Correct AnswerverifiedShow Answer

A business machine purchased April 10, 2016, for $98,000 was fully depreciated in 2016 using § 179 immediate expensing. On August 15, 2018, the machine was sold for $67,000. What is the amount and nature of the gain or loss from disposition of the machine?

Correct AnswerverifiedThe machine was a § 1231 asset because i...View AnswerShow Answer

A lease cancellation payment received by a lessee is generally treated as an exchange because the lease extinguished is usually a capital asset.

Correct AnswerverifiedShow Answer

Property sold to a related party that is depreciable by the purchaser may cause the seller to have ordinary gain.

Correct AnswerverifiedShow Answer

Vertical, Inc., has a 2018 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2017. For 2018, Vertical's net § 1231 gain is treated as:

Correct AnswerverifiedShow Answer

Which of the following assets held by a manufacturing business is a § 1231 asset?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The machine was a § 1231 asset because i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified