1- Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,200. Beta used the machinery in its business. Alpha bought the equipment a few years ago for $49,800 and has claimed $30,200 of depreciation expense. What is the amount and character of Alpha's gain?

$10,600 ordinary gain.

$10,000 ordinary gain and $10,600 1231 gain.

None of these.

$20,600 capital gain.

$20,600 ordinary income under 1239.

2-

If Lucy earns a 8% after-tax rate of return, $28,000 received in four years is worth how much today? (round present and future value amounts to 3 places)

$28,000.

$25,784.

$30,749.

$20,580.

None of these.

3-

Acme published a story about Paul and as a result Paul sued Acme for damage to his reputation, emotional distress, and punitive damages. Paul won an award of $22,000 for damages, $6,300 for emotional distress, and $74,750 for punitive damages. What amount must Paul include in his gross income?

$6,300.

$74,750.

$22,000.

$96,750.

All of these benefits are included in gross income.

4-

Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. The taxi was originally purchased for $9,500 and the adjusted basis was $1,250 at the time of the accident. The taxi was repaired at a cost of $2,875 and insurance reimbursed Don $745 of this cost. What is the amount of Don's casualty loss deduction?

$2,875

Don is not eligible for a casualty loss deduction.

$2,130

$505

$1,250