ACC 511

Group Assignment #5: Property Dispositions

Team #:_____________________

Team Members:_____________________________________________________________

___________________________________________________________________________
Due Date: 3:30 p.m. on Tuesday, September 29, 2020

Points Available: 3.0 points if 6-8 answers are correct; 2.0 points if 4-5 answers are correct;
1.0 point if 2-3 answers are correct.

1. Anton Corporation reported the following net Section 1231 gains/losses over the past
several years:
2014 $ 3,000
2015 10,000
2016 (1,000)
2017 5,000
2018 (20,000)
2019 6,000

In 2020, Anton Corporation recognizes a net Section 1231 gain of $19,000. It will be
recognized as a(n):

a. $19,000 long-term capital gain.

b. $3,000 ordinary income and $16,000 long-term capital gain.
c. $14,000 ordinary income and $5,000 long-term capital gain.
d. $15,000 ordinary income and $4,000 long-term capital gain.
e. none of the above.

2. In the current year, Coin Corporation reported the following:

Section 1231 gain $ 8,000
Short-term capital gain 2,000
Long-term capital gain 9,000
Non-recaptured Section 1231 loss from last year (6,000)
Capital loss carry-forward from last year (20,000)

After all these transactions are properly accounted for, Coin recognizes total ordinary
income of:

a. ($7,000).
b. ($1,000).
c. $2,000.
d. $6,000.
e. $19,000.
f. none of the above.
3. Oak Corporation sold a machine used in its business on June 1, 2020, for $800,000. The
machine was purchased on August 2, 2016, for $750,000, and depreciation of $500,000
had been claimed on it. Oak Corporation recognizes:

a. $550,000 Section 1231 gain.

b. $550,000 ordinary income.
c. $500,000 ordinary income and $50,000 Section 1231 gain.
d. $500,000 ordinary income and $50,000 long-term capital gain.
e. $50,000 ordinary income and $500,000 Section 1231 gain.
f. none of the above.

4. On October 3, 2020, Dailey Corporation sold a machine used in its business for $65,000.
Dailey purchased it for $60,000 on February 10, 2020. Dailey has claimed $5,000 in
depreciation on the machine. Dailey Corporation recognizes:

a. $10,000 Section 1231 gain.

b. $10,000 ordinary income.
c. $10,000 short-term capital gain.
d. $5,000 ordinary income and $5,000 Section 1231 gain.
e. none of the above.

5. On July 10, 2020, Willow Corporation sold land used in its business for $25,000. It had
purchased the land for $18,000 on September 20, 2012, Willow Corporation recognizes:

a. $7,000 Section 1231 gain.

b. $7,000 ordinary income.
c. $7,000 long-term capital gain.
d. $0.
e. none of the above.

6. Rocky Corporation acquired an office building for $2,000,000 in 2008. Depreciation in

the amount of $1,300,000 was claimed on it. Rocky sold the property on March 4, 2020,
for $1,100,000. Rocky Corporation recognizes:

a. $400,000 Section 1231 gain.

b. $400,000 ordinary income.
c. $80,000 ordinary income and $320,000 Section 1231 gain.
d. $260,000 ordinary income and $140,000 Section 1231 gain.
e. none of the above.

7. On November 21, 2020, Bluebird Corporation sold land it held for investment purposes
for $300,000. It purchased the land for $270,000 on February 1, 2020. Bluebird
Corporation recognizes:

a. $30,000 Section 1231 gain.

b. $30,000 ordinary income.
c. $30,000 long-term capital gain.
d. $30,000 short-term capital gain.
e. none of the above.
8. On June 19, 2020, Sheila (a sole proprietor) sold a truck she has used 60% for business
and 40% for personal purposes for $20,000. She purchased the truck three years ago for
$30,000 and has claimed $15,000 in depreciation on it. Sheila recognizes:

a. $9,000 Section 1231 gain.

b. $9,000 ordinary income.
c. $5,000 ordinary income.
d. $3,000 ordinary income and $2,000 long-term capital gain.
e. $3,000 ordinary income and $2,000 Section 1231 gain.
f. none of the above.