61. In 2014, Tim sells Section 1245 property for $28,000 that he had purchased in 2008. Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000. How much of the gain is taxable as ordinary income?
a. $7,000
b. $8,000
c. $13,000
d. $18,000
e. None of the above is correct
62. Sally acquired an apartment building in 1999 for $150,000 and sold it for $410,000 in 2014. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 35 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?
a. None
b. $65,000
c. $260,000
d. $325,000
e. $345,000
63. Casualty gains and losses from business or investment property:
a. May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year.
b. Are treated the same as casualty gains and losses from personal property.
c. Are subject to the 10 percent of adjusted gross income limitation.
d. Are not subject to the depreciation recapture provisions.
64. Terry has a casualty gain of $1,000 and a casualty loss of $5,400, before the $100 floor and before the adjusted gross income limitation. The gain and loss were the result of two separate casualties occurring during 2014 and both properties were personal-use assets. If Terry itemizes deductions on her 2014 return and has adjusted gross income of $25,000, what is Terry’s gain or net itemized deduction as a result of these casualties?
a. $5,300 itemized deduction, $1,000 capital gain
b. $4,300 itemized deduction
c. $1,800 itemized deduction
d. $2,800 itemized deduction, $1,000 capital gain
e. None of the above
65. Simon sold investment property 2 years ago for $750. Simon’s basis in the property was $300. Simon is receiving $150 per year from the buyer. Simon reports this income on the installment method. If Simon collects $150 in principal during the current year, how much gain should he report from the sale for the year?
a. $0
b. $75
c. $90
d. $150
e. None of the above
66. Perry acquired raw land as an investment in 1997. The land cost $60,000. In 2014, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer’s note for $110,000. If Perry elects to recognize the entire gain in the year of sale, what is his recognized gain in 2014?
a. $50,000
b. $60,000
c. $100,000
d. $110,000
e. None of the above
67. Perry acquired raw land as an investment in 2000. The land cost $60,000. In 2014, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer’s note for $110,000. Assume that Perry uses the installment method to recognize the gain and receives only the $10,000 down payment in the year of sale. How much gain should Perry recognize in 2014?
a. $5,000
b. $5,833
c. $7,000
d. $9,000
e. None of the above
68. Tim sells land to Brad for $90,000. Tim originally purchased the land for $50,000. Brad agrees to pay Tim six annual installments of $15,000 each. In year three, Brad makes his third installment of $15,000. How much taxable gain will Tim have in year three?
a. $5,000
b. $6,667
c. $13,333
d. $15,000
e. All the taxable gain should be recognized in year one.
69. Which one of the following qualifies as a like-kind exchange?
a. A chicken held by a farmer exchanged for medical services.
b. A home owned and lived in by a taxpayer exchanged for a new personal residence.
c. IBM stock exchanged for Exxon stock.
d. A Dodge Ram pickup truck used in business traded in for a new Ford 250 pickup truck also intended for business use.
e. None of the above are like-kind property.
70. In January 2014, Keyaki Construction Company exchanged an old truck, which cost $53,000 and had accumulated depreciation of $16,000, for a new truck having a fair market value of $65,000. In connection with the exchange, Keyaki paid $32,000 in cash. What is the tax basis of the new truck?
a. $37,000
b. $54,000
c. $65,000
d. $69,000
e. None of the above
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