Multiple Choice

Mary sold several Section1231 properties during Her total overall gain net of depreciation recapture was $45,000. During the last five years, she had the following net Sec.1231 gains and losses:

2001	($28,000)
1999	$15,000
1998	($30,000)

The $30,000 of gain should be characterized as follows:

	Ordinary		Capital
a.	$	45,000	$	0
b.	$	43,000	$	2,000
c.	$	28,000	$	17,000
d.	$	2,000	$	43,000

$45,000; $0

$43,000; $2,000

$28,000; $17,000

$2000; $43,000

Joe sold stock for $93,000 (actual FMV) to a partnership in which he owns 68%. Joe's basis in the stock was $160,000. On this transaction, Joe will recognize

$-0- loss

$67,000 gain

$67,000 loss

Jake had the following transactions for the year:
$15,000 Short-term capital loss
$35,000 Sec.1231 gain
There were no net Sec.1231 losses in the past five years. These transactions should be characterized as follows:

	Ordinary	Capital
a.	$ 35,000 loss	$ 15,000 loss
b.	$ 20,000 gain	$ 15,000 gain
c.	$ 20,000 loss	$ 20,000 gain
d.	$ 15,000 loss	$ 35,000 gain

$ 35,000 loss; $ 15,000 loss

$ 20,000 gain$; 0 gain

$ 0 loss; $ 20,000 gain

$ 15,000 loss; $35,000 gain

Justine's rental complex was completely destroyed by a fire. Its adjusted basis immediately before the casualty was $1,435,000. Its FMV immediately before the fire was $1,275,000. It was insured for $918,000. This was Justine's only loss of this type for the year. What amount can she deduct as a casualty loss?

$ 1,435,000

$ 360,000

$ 517,000

$ 516,900

If Sec. 1231 losses exceed Sec. 1231 gains during a tax year, then

the net loss is treated as ordinary.

the gains are long-term capital gains and the losses are ordinary losses.

the gains are ordinary gains and the losses are long-term capital losses.

the net loss is treated as long-term capital loss.

Which of the following is a false statement concerning depreciation recapture?

For real property, only accelerated depreciation in excess of straight line is subject to recapture.

For equipment, depreciation recaptured as ordinary income is the lesser of depreciation taken or gain realized.

The 20% recapture rule applies only to individual taxpayers.

The 20% recapture rule applies to real property sold at a gain.

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