25 May Question 1. Beige Corporation, a C corporation, purchases a w
Question
1. Beige Corporation, a C corporation, purchases a warehouse on August 1, 1998, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 11, 2014, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?
a. Ordinary income of $0 and § 1231 gain of $611,750.
b. Ordinary income of $411,750 and § 1231 gain of $200,000.
c. Ordinary income of $82,350 and § 1231 gain of $529,400.
d. Ordinary income of $117,650 and § 1231 gain of $494,100.
e. None of the above.
2. During the current year, Woodchuck, Inc., a closely held personal service corporation, has $115,000 of net active income, $40,000 of portfolio income, and $135,000 of passive activity loss. What is Woodchuck’s taxable income for the current year?
a. $0.
b. $20,000.
c. $40,000.
d. $155,000.
e. None of the above.
3. Grackle Corporation, a personal service corporation, had $230,000 of net active income, $40,000 of portfolio income, and a $250,000 passive activity loss during the year. How much is Grackle’s taxable income?
a. $20,000.
b. $40,000.
c. $270,000.
d. $520,000.
e. None of the above.
4. Grebe Corporation, a closely held corporation that is not a PSC, had $75,000 of net active income, $60,000 of portfolio income, and a $105,000 passive activity loss during the year. How much of the passive activity loss can Grebe deduct in the
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