ExpertHard1 markMultiple Choice
CPA · Question 47 · Area III: Property Transactions
Which of the following is a characteristic of a 'Section 1231 asset'?
Which of the following is a characteristic of a 'Section 1231 asset'?
Answer options:
A.
Held for investment.
B.
Depreciable property or real property used in a trade or business held for more than one year.
C.
Inventory held for sale to customers.
D.
Copyright held by the creator.
How to approach this question
Define §1231: Business use + Long-term holding + Depreciable/Real.
Full Answer
B.Depreciable property or real property used in a trade or business held for more than one year.✓ Correct
Section 1231 assets are depreciable personal property or real property used in a trade or business and held for more than one year. Inventory and copyrights (held by creator) are ordinary assets. Investment property is a capital asset.
Common mistakes
Confusing §1231 assets with Capital Assets (investment) or Ordinary Assets (inventory).
Practice the full CPA REG Practice Exam 2
72 questions · hints · full answers · grading
More questions from this exam
Q01A CPA is representing a client in an IRS examination regarding a complex tax shelter transaction....HardQ02A tax return preparer is facing a penalty for an understatement of tax liability on a client's re...HardQ03Taxpayer L received a Statutory Notice of Deficiency (90-day letter) from the IRS regarding a tax...HardQ04A CPA is sued for common law negligence by a third party who relied on the CPA's audit report. Th...HardQ05Which of the following communications between a CPA and a client would generally be protected by ...Hard