1. During 2016, Norman Newhouse sold equipment used in his business for $11,000. The equipment cost $10,000 and Norman had properly claimed MACRS deductions totaling $4,000. Straight-line depreciation, if it had been used, would have been $2,500. What is the amount of gain that should be reported under Sections 1231 and 1245?

A) Section 1231: $5,000; Section 1245: $0

B) Section 1231: $3,500; Section 1245: $1,500

C) Section 1231: $1,000; section 1245: $4,000

D) Section 1231: $0; Section 1245: $5,000

E) None of these

2. Karen Kirbey grants Pamela Prentiss a franchise to sell handcrafted gifts. Pamela pays Karen 15 percent of all revenue. Sales were $550,000.

How will Pamela treat this payment on her tax return?

A) $82,500 short-term capital loss

B) $82,500 long-term capital loss

C) $82,500 nonbusiness deduction

D) $82,500 business expense deduction

3. During 2020, Randy Rooney recognizes a $13,000 short-term capital loss, an $8,000 long-term capital loss and a $9,000 short-term capital gain. What is the amount and nature of Randy's capital loss carryover to 2021?

A) $4,000 short-term: $8,000 long-term

B) $4,000 short-term: $5,000 long-term

C) $1,000 short-term: $5,000 long-term

D) $1,000 short-term: $8,000 long-term

E) None of these