Answer the following statements true (T) or false (F)
1. A business plans to sell its office building which it acquired and placed in service in 1995. Sec. 1250 requires a portion of gain realized on the sale of a building used in a business and depreciated under MACRS to be recaptured as ordinary gain.
2. For noncorporate taxpayers, depreciation recapture is not required on real property placed in service after 1986.
3. When corporate and noncorporate taxpayers sell real property placed in service after 1986, all depreciation taken will be taxed at a maximum rate of 25%.
4. Unrecaptured 1250 gain is the amount of long-term capital gain which would be taxed as ordinary income if Sec. 1250 provided for the recapture of all depreciation and not just additional depreciation.
5. The amount recaptured as ordinary income under either Sec. 1245 or Sec. 1250 can never exceed the realized gain
1. FALSE
Sec. 1250 requires recapture of accumulated depreciation in excess of the straight-line amount, but all buildings placed in service after 1986 must use straight-line under MACRS.
2. TRUE
Taxpayers are required to use straight-line depreciation under MACRS for property placed in service after 1986 so there is no "additional" depreciation under Sec. 1250.
3. FALSE
Corporations do not have a preferential long-term capital gains rate.
4. TRUE
Sec. 1250 requires recapture of only "additional" depreciation, the excess of accumulated depreciation using an accelerated method over recalculated accumulated depreciation using straight-line depreciation.
5. TRUE
Sec. 1245 and Sec. 1250 depreciation recapture provisions affect the character of the gain, not the amount of the gain. See Topic Reviews I:13-1 and I:13-2.
You might also like to view...
In the leader-member exchange model, the relationship between leader and follower that is characterized by mutual trust, respect, and liking is known as a(n) ________ exchange.
A. preferred coworker B. in-group C. servant D. special E. socialized
Plant assets, current assets, property, plant and equipment, and fixed assets are all tangible assets
a. True b. False Indicate whether the statement is true or false
Passion and compassion are ______.
A. both part of Luthans and Avolio’s authentic leadership model B. outcomes of authentic leadership C. essentially the same thing D. characteristics of authentic leadership that can be developed
Conference Hotel Changes You manage a large hotel that is used by organizations and businesses for meetings and conferences. A recent storm has damaged part of your hotel which means that you have fewer rooms available for meetings. You now have nearly
20 percent fewer guest rooms for conference participants and four less meeting rooms for smaller sessions. You estimate that room repairs will take nearly a month, but the Association of Intercultural Studies is scheduled to arrive for a three-day conference in two weeks and has booked all rooms. Now there are not enough rooms for the conference. Required: As manager of the hotel, write a letter to the meeting manager for the association. Tell the manager the bad news regarding the damage to the rooms and provide an alternative of using rooms at a nearby hotel.