3. Bateman Corporation sold an office building that it used in its business for $800,950. Bateman bought the building ten years ago for $599,525 and has claimed $201,425 of depreciation expense. What is the amount and character of Bateman's gain or loss?

MULTIPLE CHOICE

a.) $40,285 ordinary and $362,565: 1231 gain.

b.) $201,425 ordinary and $201,425: 1231 gain

c. $402,850 ordinary gain.

d.) $402,850 capital gain.

e.) none of the choices are correct

7. Koch traded machine 1 for machine 2. Koch originally purchased machine 1 for $76,000 and machine 1's adjusted basis was $40,500 at the time of the exchange. Machine 2's seller purchased it for $64,500 and machine 2's adjusted basis was $55,500 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

MULTIPLE CHOICE

a.) $40,500

b.) 49,500

c.) $55,500

d.) $76,000

e.) none of the choices are correct

8. Arlington LLC traded machinery used in its business to a machinery dealer for some new machinery. Arlington originally purchased the machinery for $70,000 and it had an adjusted basis of $33,000 at the time of the exchange. The new machinery had a fair market value of $37,500. Arlington also received $7,000 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange?

MULTIPLE CHOICE

a.) $0

b.) $7,000

c.) $4,500

d.) $11,500

e.) none of the choices are correct

9. Sadie sold 12 shares of stock to her brother, George, for $670 six months ago. Sadie had purchased the stock for $940 two years earlier. If George sells the stock for $1,210 six months later, what is the amount and character of his recognized gain or loss in the current year?

MULTIPLE CHOICE

a.) $0

b.) $270 short term capital gain

c.) $270 long term capital gain

d.) $540 short term capital gain

e.) none of the choices are correct