ch10 - ch10 Student:

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ch10 Student: ___________________________________________________________________________ 1. The amount realized is the sale proceeds less the adjusted basis. True False 2. Generally, the amount realized is everything of value received in a sale less selling expenses. True False 3. The adjusted basis is the cost basis less cost recovery deductions. True False 4. An asset's tax adjusted basis is usually greater than its book adjusted basis. True False 5. The gain or loss realized is the amount realized less the adjusted basis. True False 6. The gain or loss realized is always recognized for tax purposes. True False 7. All tax gains and losses are ultimately characterized as either ordinary or capital. True False 8. Ordinary gains and losses are obtained on the sale of investments. True False 9. Accounts receivable and inventory are examples of ordinary assets. True False 10. Section 1231 assets include all assets used in a trade or business. True False 11. A parcel of land is always a capital asset. True False 12. Taxpayers can recognize a taxable gain even though an asset's real economic value has declined. True False 13. Assets held for investment and personal use assets are examples of capital assets. True False 14. After application of the lookback rule, section 1231 gains become capital while section 1231 losses become ordinary. True False 15. Depreciation recapture changes both the amount and character of a gain. True False 16. Only accelerated depreciation is recaptured for section 1245 assets. True False 17. Section 1250 recaptures the excess of accelerated depreciation over straight line depreciation on real property placed in service between 1981 and 1986 as ordinary income. True False
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18. For corporations, section 291 recaptures 20 percent of the lesser of depreciation taken or the realized gain as ordinary income. True False 19. Unrecaptured section 1250 gain is taxed at a maximum rate of 25 percent. True False 20. Unrecaptured section 1250 gains apply only to individuals. True False 21. Section 1239 recharacterizes 50 percent of the gain on sales to a related party as ordinary income. True False 22. A net section 1231 gain becomes ordinary while a net section 1231 loss becomes long-term capital gain. True False 23. The section 1231 lookback rule recharacterizes 1231 gains if 1231 losses have created ordinary losses in the last 5 years. True False 24. The section 1231 lookback rule applies whether there is a net gain or loss. True False 25. Realized gains are recognized unless there is specific exception. True False 26. For a like-kind exchange, realized gain is deferred if the exchange is solely for like-kind property.
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