Assignment
1. Which of the following is Section 1231 property?
A. A building used in a trade or business.
B. Poultry (chickens) used for egg production.
C. Accounts receivable
D. Inventory
E. Paintings owned by the artist.
2. Jim, a single taxpayer, bought his home 20 years ago for $25,000 (let's assume he does NOT live in Silicon Valley). He has lived in the home continuously since he purchased it. In 2015, he sells his home for a gain of $200,000. What is Jim's taxable gain on the sale?
A. $0
B. $50,000
C. $125,000
D. $175,000
3.Gene purchased a house 18 months ago for $350,000 (let's assume he does NOT live in Silicon Valley). If Gene sells his house due to unforeseen circumstances for $550,000 after living in it for the entire 18 months, what is his taxable gain? Assume Gene's "unforeseen circumstances" meets the definition provided in our book.
A. $0
B. $12,500
C. $50,000
D. $200,000
4.Fred and Sarah exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $14,000 (fair market value of $15,000) in exchange for Sarah's equipment with a fair market value of $12,000 plus $3,000 cash. How much gain should Fred recognize on the exchange?
A. $3,000
B. $2,000
C. $1,000
D. $0
5.During 2015, Paul sells residential rental property for $300,000, which he acquired in 2006 for $150,000. Paul has claimed straight-line depreciation on the building of $57,525 (assume that amount is correct). What is the amount and nature of Paul's gain on the sale of the rental property?
A. $207,525 Section 1231 gain
B. $150,000 Section 1231 gain, $57,525 "unrecaptured depreciation"
C. $167,400 Section 1231 gain, $57,525 ordinary income.
D. $190,125 Section 1231 gain, $17,400 "unrecaptured depreciation"
6. All of the following assets are capital assets, except:
A. A personal automobile
B. Shares in Google, Inc.
C. Business inventory
D. Furniture in your home
E. Your collection of historic postage stamps
7. Bob sells land held for investment for $45,000 cash and the purchaser also assumes Bob's $32,500 debt on the investment. The basis of Bob's investment is $55,000. What is the gain or loss realized on the sale?
A. $10,000 loss
B. $10,000 gain
C. $12,500 gain
D. $22,500 loss
E. $22,500 gain
8.In 2015, Mary sells a machine used in her business for $15,000. The machine was purchased on May 1, 2011 at a cost of $12,500. Mary has claimed depreciation on the machine of $4,750 (assume that amount is correct). What is the amount and nature of Mary's gain as a result of the sale of the machine?
A. $7,250 Section 1231 gain
B. $7,250 ordinary income under Section 1245
C. $2,500 ordinary income and $4,750 Section 1231 gain
D. $2,500 Section 1231 gain and $4,750 ordinary income under Section 1245
9. Pat sells real estate for $30,000 cash and a $120,000 5-year note. If her basis in the property is $90,000 and she receives only the $30,000 cash down payment in the year of sale, how much is Pat's taxable gain in the year of sale using the installment sales method?
A. $60,000
B. $30,000
C. $15,000
D. $12,000
E. $0
10. Which of the following IS a capital asset?
A. Accounts Receivable
B. Copyright created by the taxpayer
C. Copyright held by the writer
D. Business inventory
E. Your personal residence (assuming you own one).