ACC 455 WEEK 1 KNOWLEDGE CHECK | GRADED A

ACC 455 WEEK 1 KNOWLEDGE CHECK Which of the following results in an ordinary gain or loss? a) Sale of a machine at a gain b) Sale of stock held for investment c) Sale of a §1231 asset d) Sale of inventory e) None of the choices are correct 2. Mary exchanged an office building used in her business for some land. Mary originally purchased the building for $45,000 and it had an adjusted basis of $20,000 at the time of the exchange. The land had a fair market value of $40,000. Mary also gave $4,000 in the transaction. What is Mary's adjusted basis in the land after the exchange? a) $20,000 b) $24,000 c) $36,000 d) $40,000 e) None of the choices are correct. 3. How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange? a) The like-kind property to be received must be identified within 45 days. b) The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer’s taxable year. c) The like-kind property to be received must be identified within 180 days. d) All of the choices are correct. 4. Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain? a) $20,000 ordinary income under §1239. b) $10,000 ordinary gain and $10,000 §1231 gain. c) $20,000 ordinary gain. d) $20,000 capital gain e) None of the choices are correct. 5. What does unrecaptured §1250 gains apply? a) When the taxpayer makes the election. b) It applies only when non-corporate taxpayers sell depreciable real property at a gain. c) It applies when §1245 recapture trumps §1250 recapture. d) It applies only when real property purchased before 1986 is sold at a gain. e) None of the choices are correct.