Area III: Property Transactions

A taxpayer purchased a machine for use in their business for $20,000. They paid $1,000 for shipping and $2,000 for installation. One year later, the machine was repaired at a cost of $500. What is the taxpayer's initial tax basis in the machine?

In Year 1, J purchased stock for $10,000. In Year 3, J gave the stock to K when the fair market value (FMV) was $8,000. No gift tax was paid. K sold the stock in Year 4 for $7,000. What is the amount and character of K's loss?

Company X purchased 5-year MACRS property for $200,000 and placed it in service on November 15 of the current year. This was the only personal property placed in service during the year. Which depreciation convention must Company X use?

A taxpayer sold a building used in their business for $500,000. The building was purchased for $400,000. Total depreciation taken was $100,000 (straight-line). What is the amount and character of the gain?

A taxpayer exchanged a business truck (Adjusted Basis $10,000, FMV $15,000) for another business truck (FMV $15,000). The exchange occurred in the current year. What is the recognized gain on this transaction?

Under the Uniform Capitalization Rules (UNICAP) of IRC §263A, which of the following costs must be capitalized into inventory?

Which of the following is a characteristic of a 'Section 1231 asset'?

A taxpayer purchased a $10,000 machine for business use. They elected to expense $6,000 under Section 179. What is the basis for MACRS depreciation?

In Year 1, Alex received a gift of stock from a parent. The parent's adjusted basis was $10,000, and the fair market value (FMV) at the date of the gift was $8,000. No gift tax was paid. In Year 2, Alex sold the stock for $9,000. What is the amount of gain or loss Alex must recognize?

A taxpayer purchased 100 shares of TechCorp stock for $5,000 on January 1. On December 15 of the same year, the taxpayer sold the 100 shares for $3,000. On December 20, the taxpayer purchased 50 shares of TechCorp stock for $1,600. What is the recognized loss on the December 15 sale and the basis of the new 50 shares?

In Year 1, a taxpayer placed the following 5-year MACRS assets in service: Asset A (Cost $100,000) on February 1; Asset B (Cost $200,000) on November 1. No other assets were placed in service. Which depreciation convention must be used?

A company acquired a patent for $150,000 as part of the purchase of a trade or business on August 1 of Year 1. What is the amortization deduction for Year 1?

A taxpayer sold a machine used in their business for $50,000. The machine was purchased for $40,000, and $15,000 of depreciation had been taken (Adjusted Basis = $25,000). How is the gain recognized?

Under the Uniform Capitalization Rules (UNICAP) of IRC §263A, which of the following costs must be capitalized into inventory?

A taxpayer exchanges a business building (Adjusted Basis $100,000, FMV $200,000) for a new business building (FMV $180,000) and $20,000 cash. What is the recognized gain and the basis of the new building?

Which of the following statements regarding the Section 179 expense deduction is correct for the current year?

In Year 1, Jordan received a gift of stock from a parent. The parent's adjusted basis was $10,000, and the fair market value (FMV) at the date of the gift was $8,000. Jordan sold the stock in Year 2 for $9,000. What is the amount of gain or loss Jordan must report for Year 2?

A taxpayer purchased a machine for business use on November 15, Year 1, for $100,000. This was the only personal property placed in service during the year. The taxpayer uses the MACRS system. Which convention must be used to calculate depreciation for Year 1?

In a like-kind exchange under IRC §1031 (post-TCJA), which of the following exchanges qualifies for nonrecognition of gain?

A taxpayer sells stock for a loss of $5,000 on May 1. On May 15, the taxpayer purchases substantially identical stock. Which of the following statements correctly describes the tax treatment of the loss?

Under the Uniform Capitalization Rules (UNICAP) of IRC §263A, which of the following costs must be capitalized into inventory for a manufacturer?

A taxpayer purchased a $10,000 computer for business use. The taxpayer wants to maximize the deduction in the current year. Assuming sufficient business income and investment limits are not exceeded, what is the optimal tax treatment?

A taxpayer exchanges a business warehouse (adjusted basis $100,000, FMV $200,000) for a new warehouse (FMV $180,000) and $20,000 cash. What is the recognized gain?

A taxpayer sells a rental property for $500,000. The property was purchased for $400,000. The taxpayer claimed $100,000 of depreciation deductions (straight-line) during the holding period. What is the character of the gain?

In Year 1, Jordan received a gift of stock from a parent. The parent's adjusted basis was $10,000, and the fair market value (FMV) at the date of the gift was $8,000. No gift tax was paid. In Year 2, Jordan sold the stock for $9,000. What is the amount of gain or loss Jordan must report?

A taxpayer purchased a machine for business use on November 15 of the current year for $100,000. This was the only depreciable personal property placed in service during the year. The taxpayer does not elect Section 179 expensing or bonus depreciation. Which MACRS convention must be used?

In the current year, a taxpayer sold 100 shares of Tech Corp stock for $4,000. The taxpayer's basis in the stock was $5,000. Two weeks later, the taxpayer purchased 50 shares of Tech Corp stock for $2,200. What is the taxpayer's recognized loss on the sale and the basis of the new 50 shares?

A taxpayer exchanged a warehouse used in business (adjusted basis $200,000, FMV $300,000) for land to be used in business (FMV $280,000) and $20,000 cash. What is the taxpayer's recognized gain and the basis of the new land?

Which of the following intangible assets is amortizable over 15 years under IRC §197?

Under the Uniform Capitalization Rules (UNICAP) of IRC §263A, which of the following costs must be capitalized into inventory for a manufacturer?

A taxpayer sold a rental property for $500,000. The property was acquired for $400,000. Total depreciation taken was $100,000. What is the character of the gain?

Which of the following is a 'Section 1231 asset'?

A taxpayer purchased a $100,000 machine for business use. The taxpayer expensed $20,000 under Section 179. The remaining basis is depreciated using MACRS. What is the basis for MACRS depreciation?