REG mod 34b

Question 1

Section 1231 losses exceed section 1231 gains. This results in what type of loss?

Answer 1

An ordinary loss

Question 2

What is the basis of property that was received as a gift and sold at loss?

Answer 2

The basis for a loss is either the donor’s basis or the fair market value of property on the date of the gift; the basis is the lesser of the two amounts.

Question 3

What is the treatment of loses when there is a related party sale of property?

Answer 3

Related party losses are not permitted

Question 4

What type of property is governed by section 1250 recapture?

Answer 4

Real Property that is not section 1245 recovery property.

Question 5

Describe Joint Tenancy.

Answer 5

When multiple people share ownership interest in real or personal property. The ownership interest cannot be transferred upon death—the other co-tenants will own the property.

Question 6

What type of property is a patent?

Answer 6

Personal property

Question 7

Who administers patents in the United States?

Answer 7

The US Patent and Trademark Office

Question 8

Inventory and accounts receivable are considered to be capital assets. True / False

Answer 8

False. Inventory and accounts receivable are not capital assets.

Question 9

To what extent is a gain on section 1231 property treated as ordinary income?

Answer 9

To the extent of Section 291, 1245, and 1250 recapture rules

Question 10

An office building is considered to be a section 1245 asset. True / False

Answer 10

False.

Question 11

Real property uses what averaging convention for depreciation purposes?

Answer 11

Half Month Convention

Question 12

Name the two averaging conventions for depreciation purposes that may be used on personal property?

Answer 12

Mid-year Convention & Mid-Quarter Convention

Question 13

What is the basis of property received as an inheritance?

Answer 13

Generally, the basis is the fair market value on the date of death. Note: an alternate valuation date may be selected. (FMV up to 6 months after death.)

Question 14

Inherited property is considered to be long term capital gain property. True / False

Answer 14

True. Even if the heir holds the property for less than one year, the sale of the property results in a long term capital gain (loss).

Question 15

If section 1231 gains exceed section 1231 losses, the net gain is treated as a long-term capital gain. True / False

Answer 15

TRUE