Reference no: EM132720501
Questions -
Q1. Nella inherited a house from her grandfather Nick on 3/1/2015. Nick had purchased the house on 8/4/1980 for $500,000. On 3/1/2015 the house had a FMV of $1,000,000. Nella moved into the house on 3/1/2015. She lived there until 7/6/2019 when it had a FMV of $900,000. She then started renting it out and depreciated it by $20,000 until she sold it on 12/1/2020 for $1,050,000.
a. $570,000 gain.
b. $550,000 LTCG.
c. $170,000 gain ($20,000 1250 gain and $150,000 remaining 1231 gain)
d. No gain or loss.
e. $70,000 gain ($20,000 1250 gain and $50,000 remaining 1231 gain)
Q2. Ursula received a gift of a house from her mother, Shelly. Shelly bought the house on 3/1/2000 for $900,000. On 5/1/2015 when the house was worth $700,000, Shelly gifted it to Ursula. Ursula rent the house out from 5/1/2015 until she moved into the house on 8/1/2019 when the house was worth $850,000. During the time it was rented she deducted $20,000 of depreciation. If Ursula sells the house for $900,000. Urusula will recognize.
a. $70,000 1231 gain
b. $20,000 LTCG
c. $50,000 LTCG
d. $70,000 LTCG
e. $150,000 LTCG
f. $20,000 Section 1250 Gain
g. No gain or loss
Q3. Nella inherited a house from her grandfather Nick on 3/1/2015. Nick had purchased the house on 8/4/1980 for $500,000. On 3/1/2015 the house had a FMV of $1,000,000. Nella moved into the house on 3/1/2015. She lived there until 7/6/2019 when it had a FMV of $900,000. She then started renting it out and depreciated it by $20,000 until she sold it on 12/1/2020 for $850,000.
a. Nella recognizes a $130,000 as a 1231 loss.
b. Nella recognizes $0 gain or loss.
c. Nella recognizes a $370,000 LTCG
d. Nella recognizes a $150,000 1231 Loss
e. Nella recognizes a $370,000 1231 gain
Q4. Zelda purchased land on 3/1/2000 for $200,000. She put a mobile home on the land and lived there until May 1, 2019 when it was valued at $160,000. She moved off the land and started using it as a farming business in May 2019. She sold the land on April 5, 2020 for $140,000. Prior to netting any gains and losses, what is Zelda's recognized gain or loss on the sale of the land.
a. $20,000 Section 1231 Loss
b. $20,000 Short-term capital loss.
c. $60,000 1231 Loss
d. $20,000 Long-term capital loss
e. $60,000 Long term capital Loss
f. No Gain or loss
Q5. Zelda purchased land on 3/1/2000 for $200,000. She put a mobile home on the land and lived there until May 1, 2019 when it was valued at $160,000. She moved off the land and started using it as a farming business in May 2019. She sold the land on April 5, 2020 for $210,000. Prior to netting any gains and losses, what is Zelda's recognized gain or loss on the sale of the land?
a. $10,000 LTCG
b. $50,000 LTCG
c. $10,000 1231 Gain
d. $50,000 1231 Gain
e. $50,000 Short-term Capital Gain