1. During 2015, Paul sells residential rental property for $280,000, which he acquired in 1995 for $145,000. Paul has claimed straight-line depreciation on the building of $54,500. What is the amount and nature of Paul's gain on the sale of the rental property?
a. $189,500 Section 1231 gain
b. $145,000 Section 1231 gain, $54,500 "unrecaptured depreciation"
c. $54,500 Section 1231 gain, $189,500 ordinary income
d. $135,000 Section 1231 gain, $54,500 "unrecaptured depreciation"
e. None of these choices are correct
2. Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $12,000 (fair market value of $15,000) in exchange for Sarajane's equipment with a fair market value of $13,000 plus $2,000 cash. How much gain should Fred recognize on the exchange?
a. $3,000
b. $2,000
c. $1,000
d. $0
e. None of these choices are correct.
3. Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $12,000 (fair market value of $15,000) in exchange for Sarajane's equipment with a fair market value of $13,000 plus $2,000 cash.
What is Sarajane's basis in the equipment received in the exchange, assuming her basis in the equipment given up was $12,000?
a. $0
b. $12,000
c. $14,000
d. $15,000
e. None of these choices are correct.