ACCT 42003 - Quiz 1

Which of the following is true regarding disallowed losses between related taxpayers? The tax laws essentially treat related parties as the same taxpayer. The holding period of the seller carries over to the buyer. The related person always receives a carryover basis. The seller's realized loss is deferred until the buyer sells the assets. None of the choices are correct.

The tax laws essentially treat related parties as the same taxpayer.

The MACRS recovery period for automobiles and computers is: three years. five years. seven years. ten years. None of the choices are correct.

five years

Which of the following depreciation conventions is not used under MACRS? Full-month Half-year Mid-month Mid-quarter All of the choices are used under MACRS.

Full-month

Which of the following is not a §1245 asset if held for more than one year? Machinery Automobile Business cell phone Land None of the choices are correct.

Land

An office desk is an example of: business property. personal-use property. personal property. real property. personal property and business property.

personal property and business property

The sale at a loss of machinery that was used in a trade or business and held for more than one-year results in which of the following types of loss? Capital §291 §1231 §1245 None of the choices are correct.

§1231

What is the character of land used in an active trade or business for two years? Capital Ordinary §1231 Investment None of the choices are correct.

§1231

Which depreciation convention is the general rule for tangible personal property? Full-month Half-year Mid-month Mid-quarter None of the choices are conventions for tangible personal property.

Half-year

Tax depreciation is currently calculated under what system? Sum-of-the-years'-digits Accelerated cost recovery system Modified Accelerated Cost Recovery System Straight-line system None of the choices are correct.

Modified Accelerated Cost Recovery System

Which one of the following is not considered boot in a like-kind exchange? All of the choices can be considered as boot. Cash Mortgage received Other property Mortgage given

Mortgage received

Which of the following sections does not recapture or recharacterize a taxpayer's gain? §1239 §1250 §1245 §291 None of the choices are correct.

None of these choices are correct

How is the recovery period of an asset determined? Estimated useful life Treasury regulation Revenue Procedure 87-56 Revenue Ruling 97-56 None of the choices are correct.

Revenue Procedure 87-56

Which of the following results in an ordinary gain or loss? Sale of a machine at a gain Sale of stock held for investment Sale of a §1231 asset Sale of inventory None of the choices are correct.

Sale of inventory

The general rule regarding the exchanged basis in the new property received in a like-kind exchange is: the basis is equal to the adjusted basis of the old property. the basis is equal to the fair market value of the old property. the basis is equal to the cost basis of the old property. the basis is equal to the fair market value of the new property. All of the choices are correct.

The basis is equal to the adjusted basis of the old property

Which one of the following is not a requirement of a deferred like-kind exchange? The like-kind property must be received within 180 days. All of the choices are correct. The exchange must be completed within the taxable year. The exchanged property must be like-kind. The like-kind property to be received must be identified within 45 days.

The exchange must be completed within the taxable year.

Which of the following is not used in the calculation of the amount realized? Cash Adjusted basis Fair market value of other property received Buyer's assumption of liabilities All of the choices are used.

Adjusted basis

Which of the following is how gain or loss realized is calculated? Cash less selling costs Cost basis less cost recovery Cash less cost recovery Amount realized less adjusted basis None of the choices are correct.

Amount realized less adjusted basis

Which of the following is true regarding depreciation recapture? Changes the character of a loss Changes the character of a gain Changes the amount of a gain Only applies to ordinary assets None of the choices are correct.

Changes the character of a GAIN

How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange? The like-kind property to be received must be identified within 45 days. 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. The like-kind property to be received must be identified within 180 days. All of the choices are correct. There is no deadline for the identification of replacement property.

The like-kind property to be received must be identified within 45 days.

The sale of land held for investment results in which of the following types of gain or loss? Capital Ordinary §1231 §1245 None of the choices are correct.

Capital

The sale of computer equipment used in a trade or business for nine months results in which of the following types of gain or loss? Capital Ordinary §1231 §1245 None of the choices are correct.

Ordinary

An example of an asset that is both personal-use and personal property is: all of the assets are personal-use and personal property. a computer used solely to monitor the CEOs investments and to complete her Form 1040. a company airplane used by the CEO for business travel. a computer used solely to email company employees regarding company activities. a storage building used by the CEO to store personal records.

a computer used solely to monitor the CEOs investments and complete her Form 1040