11. Butte sold a machine to a machine dealer for $50,000. Butte bought the machi
ID: 2380298 • Letter: 1
Question
11. Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several year ago and has a claimed $12,5000 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?
a. 7,500 section 1231 loss
b. $7,500 section 1231 gain
c. $7,500 ordinary gain
d. 7,500 capital gain
e. none of these
12. Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions. What is Leesburg's gain or loss realized on the machine?
a. $800 gain
b. $1,000 gain
c. $1,200 loss
d. 1,400 loss e. none of these
13.Brandon and Jane Forte file a joint return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends and $1,000 long term capital gains. Their expenses for the year consist of $3,000 investment interest expense and $900 tax preparation fees. Assuming that the Forte's marginal tax is 30%, what is the amount of investment interest expense deduction for the year?
a. Zero; investment interest expense is below two percent of AGI.
b.$1,000
c. $2,500
d. $3,000
e. None of these
14. Bozeman sold equiptment that it uses in its business for $80,000. Bozenman bought the equiptment two years ago for $75.000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozen's gain or loss?
a. $25, 000 section 1231 gain.
b. $20,000 ordinary gain, and $5,000 section 1231 gain.
c. $5,000 ordinary gain and $20,000 section 1231 gain
d. $25,000 capital gain
e. None of these
15.Tax depreciation is currently calculated under what system?
a. Sum of the years digits
b. Accelerated cost recovery system
c. Modified accelerated cost recovery system
d. Straight line sysytem
e. None of these.
Explanation / Answer
b. $7,500 section 1231 gain
b. $1,000 gain
c. $2,500
a. $25, 000 section 1231 gain.
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