ACTG 445 CHAPTER 10 PROPERTY DISPOSITIONS
36. Which of the following is not used in the calculation of the amount realized?
A. Cash.
B. Adjusted
... [Show More] basis.
C. Fair market value of other property received.
D. Buyer's assumption of liabilities.
E. All of the above.
The amount realized is everything of value received (cash, fair market value of other property, and the buyer's assumption of liabilities) less selling costs.
37. Which of the following is not true regarding an asset's adjusted basis?
A. Tax adjusted basis is greater than book adjusted basis.
B. Tax adjusted basis is less than book adjusted basis.
C. Adjusted basis is cost basis less cost recovery deductions.
D. All of the above are true.
The tax adjusted basis is usually less than book adjusted basis because tax depreciation usually exceeds book depreciation.
38. Which of the following is not usually included in an asset's tax basis?
A. Purchase price
B. Sales tax
C. Shipping costs
D. Installation costs
E. All of the above
The purchase price, sales tax, shipping, and installation costs are all included in an assets tax basis.
39. Which of the following is how gain or loss realized is calculated?
A. Cash less selling costs.
B. Cost basis less cost recovery.
C. Cash less cost recovery.
D. Amount realized less adjusted basis.
E. None of the above.
Gain or loss realized is simply the amount realized less adjusted basis.
40. Which of the following realized gains results in a recognized gain?
A. Farm machinery traded for farm machinery.
B. Sale to a related party.
C. Involuntary conversion.
D. Iowa cropland for a Minnesota warehouse.
Realized gains, but not losses, on sales to a related party are recognized.
41. Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions. What is Leesburg's gain or loss realized on the machine?
A. $800 gain.
B. $1,000 gain.
C. $1,200 loss.
D. $1,400 loss.
E. None of the above.
The gain realized is the $2,200 amount realized less the $1,400 ($2,600 - $1,200) adjusted basis.
42. The sale of land held for investment results in the following type of gain or loss?
A. Capital.
B. Ordinary.
C. Section 1231.
D. Section 1245.
E. None of the above.
Assets held for investment generate capital gains or losses.
43. The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?
A. Capital.
B. Ordinary.
C. Section 1231.
D. Section 1245.
E. None of the above.
Assets used in a trade or business and held for more than one year are section 1231 assets and do not require depreciation recapture [Show Less]