32 to 40 (true and false? Federal tax)

31. In Year 0, Ursula LLC sold machinery with a fair value of $150,000 to James. The machinery's original basis was $135,000 and Ursula LLC's accumulated depreciation on the machinery was $35,000. James paid Ursula LLC $50,000 immediately (in Year 0) and provided a promissory note to Ursula indicating that James will pay $50,000 a year for the next 2 years (Years 1 and 2), beginning in January of Year 1. Determine the amount and character of the gain Ursula LLC will recognize in Year 0 a. $7,143 section 1245 recapture, $9,524 section 1231 gain b. $35,000 section 1245 recapture, $16,667 section 1231 gairn c. $5,000 section 1245 recapture, $35,000 section 1231 gain d. $11,667 section 1245 recpature, $15,000 section 1231 gain e. $35,000 section 1245 recapture, $5,000 section 1231 gain RUE/FALSE (A TRUE, B FALSE) 32. Section 1231 assets include all assets used in a trade or business 33. Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has decline. 34. Depreciation recapture changes both the amount and character of gain. 35. Ralph borrowed $4 million and used the proceeds in his internet business. The interest on this debt is not subject to an interest limitation if Ralph's business has average annual gross receipts of $25 million or less for the prior three taxable years. 36. When a taxpayer borrows money and invests the loan proceeds in municipal bonds, the interest paid by the taxpayer on the debt is tax deductible as investment interest 7. Individuals may file for and receive a six-month extension of time to file their tax return and pay their taxes without penalty 38. An individual could pay 100-percent of her tax liability by the due date of her tax return and still be subject to underpayment tax penalties. 39. Used property is eligible for bonus depreciation. 40. The section 179 immediate expensing phases out based upon a taxpayer's taxable income