25 May 1. Lynne owns depreciable residential rental real estate which
1. Lynne owns depreciable residential rental real estate which has accumulated depreciation (all from straight-line) of $65,000. If Lynne sold the property, she would have a $53,000 gain. The initial characterization of the gain would be:
a. Section 1245 gain.
b. Section 1231 gain.
c. Section 1250 gain.
d. Section 1239 gain.
e. None of the above.
2. A retail building used in the business of a sole proprietor is sold on March 10, 2014, for $342,000. The building was acquired in 2004 for $400,000 and straight-line depreciation of $104,000 had been taken on the building. What is the maximumunrecaptured § 1250 gain from the disposition of this building?
a. $400,000.
b. $322,000.
c. $104,000.
d. $26,000.
e. None of the above.
3. Which of the following statements is correct?
a. When depreciable property is gifted to another individual taxpayer, the depreciation recapture potential is extinguished.
b. When depreciable property is inherited by a taxpayer, the depreciation recapture potential is extinguished.
c. When corporate depreciable property is distributed as a dividend, the depreciation recapture potential is generally not recognized.
d. When depreciable property is contributed to charity, the depreciation recapture potential has no effect on the amount of the charitable contribution deduction.
e. All of the above are correct.
4. Which of the following would extinguish the § 1245 recapture potential?
a. An exchange of depreciable business equipment for like-kind business equipment with gain realized, but not recognized.
b. A nontaxable incorporation under § 351.
c. A nontaxable contribution to a partnership under § 721.
d. A nontaxable reorganization.
e. None of the above.
5. Section 1239 (relating to the sale of certain property between related taxpayers) does notapply unless the property:
a. Was depreciated by the transferor.
b. Is depreciable in the hands of the transferee.
c. Is a capital asset.
d. Is real property.
e. None of the above.
.
108. An individual has a $40,000 § 1245 gain, a $35,000 § 1231 gain, a $33,000 § 1231 loss, a $3,000 § 1231 lookback loss, and a $15,000 long-term capital gain. The net long-term capital gain is:
a. $30,000.
b. $40,000.
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