Question 1

Discuss the general differences between Section 1245 and Section 1250 property.

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Question 2

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George's construction company completed 5 homes during February 2016.He sells one of the homes in March 2017 at a $37,000 gain.

Accepted Answer

The answer of Classify the gain or loss on each...

Question 3

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-After using a house as his personal home for 20 years,George converts it in 2006 to an office building for use in his construction business.He sells the building at a $65,000 loss in 2017.

Accepted Answer

The house that George converted to an office building falls under Section 1231, which deals with property used in business and held for more than one year. The loss from selling the building is also considered a loss under Section 1231, which means it can be treated as an ordinary loss and deducted against his income.

Question 4

Dragonian Corporation sells a depreciable asset.Dragonian paid $50,000 for the asset.Accelerated depreciation on the asset is $12,000 up to the date of sale.Straight-line depreciation is $8,000.Determine the amount and character of the gain (loss)on the sale under each of the following assumptions:
a.The asset is equipment.Dragonian deducted the maximum depreciation and the sales price is $44,000.
b.The asset is an office building purchased in 1984.Dragonian deducted the maximum depreciation and the sales price is $54,000.
c.The asset is an office building purchased in 2006.Dragonian deducted straight-line depreciation and the sales price is $54,000.

Accepted Answer

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Question 5

Maria acquired a personal computer to use 100% in her business for $6,000.She took MACRS deductions of $2,880 before selling it in current year.Determine the amount and character of the gain (loss)recognized on the sale of the computer,assuming a sales price that differs in each of the three independent situations:

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The answer of Maria acquired a personal computer to use...

Question 6

Milton has the following transactions related to his investments and his business during 2017:
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a.Determine the amount and character of each gain or loss.
b.Determine the effect of the gains and losses on Milton's 2017 adjusted gross income.You must present the calculations in proper form to receive full credit.

Accepted Answer

The answer of Milton has the following transactions related to...

Question 7

Explain why a taxpayer would ever consider using accelerated depreciation methods on personal property,given the provisions of Section 1245.

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Question 8

Matt has a substantial portfolio of securities.As of December 2 of the current year,Matt has a net capital gain position of $22,000.Discuss Matt's optimal tax-planning strategy for capital gains and losses.

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The answer of Matt has a substantial portfolio of securities.As...

Question 9

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George's wife sells stock she purchased 10 months ago at a gain of $212.

Accepted Answer

Since the stock was held for less than one year (10 months), the gain would be classified as a short-term capital gain.

Question 10

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George regularly invests unneeded business cash in Eli Lilly common stock.He has bought 200 shares of stock on May 1 of each year from 1986 through 2016.Because of an urgent need for cash,he sells 100 shares of the stock at an $850 gain on March 28,2017.Because the stock is held in a brokerage account,he did not have any paper shares of stock to surrender.He merely told his broker to sell 100 shares.

Accepted Answer

The gain on the sale of the Eli Lilly stock is classified as a long-term capital gain because George held the stock for more than one year before selling it.

Question 11

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George sells land purchased in 1989 that he used to park construction equipment at a gain of $16,500.

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Question 12

Match each statement with the correct term below.
-Unrecaptured Section 1250 gain

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The answer of Match each statement with the correct term...

Question 13

Discuss the general differences between Section 1245 and Section 1250 recapture provisions.

Accepted Answer

The answer of Discuss the general differences between Section 1245...

Question 14

What incentive provisions or preferential treatments exist for capital gains?

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Question 15

Nicole has the following transactions related to her investments and her sole proprietorship during 2017:
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a.Determine the character of each gain or loss:
b.Determine the effect of the gains and losses on Nicole's current-year adjusted gross income.​

Accepted Answer

The answer of Nicole has the following transactions related to...

Question 16

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George sells a fully depreciated air compressor that cost $975 for $650.The compressor was used to operate air tools.

Accepted Answer

The gain on the sale of a fully depreciated asset used in a business, like an air compressor for operating air tools, is classified as Section 1245 gain. This section recaptures depreciation as ordinary income up to the amount of the gain realized on the sale.

Question 17

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-George sells his personal use automobile at a loss of $4,300.

Accepted Answer

The loss on the sale of a personal use automobile is considered a nondeductible personal loss, hence it does not qualify for capital loss treatment or any other specific tax treatment listed.

Question 18

Watson sells equipment he used in his business.The equipment cost $50,000 and had an adjusted basis of $32,000 on the date of sale.
a.If Watson sells the equipment for $23,000,what is the amount and character of the recognized gain or loss?
b.If Watson sells the equipment for $55,000 what is the amount and character of the recognized gain or loss?

Accepted Answer

The answer of Watson sells equipment he used in his...

Question 19

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all.
-On December 1,2015,George paid $17,500 for a painting.On October 31,2017,he sells the painting for $26,750.

Accepted Answer

The answer of Classify the gain or loss on each...

Quiz 11: Property Dispositions

Discuss the general differences between Section 1245 and Section 1250 property.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George's construction company completed 5 homes during February 2016.He sells one of the homes in March 2017 at a $37,000 gain.

Explain why a taxpayer would ever consider using accelerated depreciation methods on personal property,given the provisions of Section 1245.

Matt has a substantial portfolio of securities.As of December 2 of the current year,Matt has a net capital gain position of $22,000.Discuss Matt's optimal tax-planning strategy for capital gains and losses.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George's wife sells stock she purchased 10 months ago at a gain of $212.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells land purchased in 1989 that he used to park construction equipment at a gain of $16,500.

Match each statement with the correct term below. -Unrecaptured Section 1250 gain

Discuss the general differences between Section 1245 and Section 1250 recapture provisions.

What incentive provisions or preferential treatments exist for capital gains?

Nicole has the following transactions related to her investments and her sole proprietorship during 2017: a.Determine the character of each gain or loss: b.Determine the effect of the gains and losses on Nicole's current-year adjusted gross income.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells a fully depreciated air compressor that cost $975 for $650.The compressor was used to operate air tools.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells his personal use automobile at a loss of $4,300.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -On December 1,2015,George paid $17,500 for a painting.On October 31,2017,he sells the painting for $26,750.

Quiz 11: Property Dispositions

Discuss the general differences between Section 1245 and Section 1250 property.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George's construction company completed 5 homes during February 2016.He sells one of the homes in March 2017 at a $37,000 gain.

Explain why a taxpayer would ever consider using accelerated depreciation methods on personal property,given the provisions of Section 1245.

Matt has a substantial portfolio of securities.As of December 2 of the current year,Matt has a net capital gain position of $22,000.Discuss Matt's optimal tax-planning strategy for capital gains and losses.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George's wife sells stock she purchased 10 months ago at a gain of $212.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells land purchased in 1989 that he used to park construction equipment at a gain of $16,500.

Match each statement with the correct term below. -Unrecaptured Section 1250 gain

Discuss the general differences between Section 1245 and Section 1250 recapture provisions.

What incentive provisions or preferential treatments exist for capital gains?

Nicole has the following transactions related to her investments and her sole proprietorship during 2017: ​ a.Determine the character of each gain or loss: b.Determine the effect of the gains and losses on Nicole's current-year adjusted gross income.​

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells a fully depreciated air compressor that cost $975 for $650.The compressor was used to operate air tools.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -George sells his personal use automobile at a loss of $4,300.

Classify the gain or loss on each of George's assets listed below using the following codes.Note: a code may be used once,more than once,or not at all. -On December 1,2015,George paid $17,500 for a painting.On October 31,2017,he sells the painting for $26,750.

Nicole has the following transactions related to her investments and her sole proprietorship during 2017: a.Determine the character of each gain or loss: b.Determine the effect of the gains and losses on Nicole's current-year adjusted gross income.