Research in Federal Taxation

21 Sweetpea Corporation sold a tiller that it used in its landscaping business. The tiller cost s5,000 and Sweetpea had taken $2,000 of depreciation deductions up to the time of sale. The corporation sold the for $4,000 two years after it was purchased. What is sweetpea's gain or loss? tiller a. Sweetpea has ordinary income recapture of$1,000 under Code Sec. 1245. b. Sweetpea has a Section 1231 gain ofsi,000. c. Sweetpea has a Section 1231 and si,000 of ordinary income recapture underCode Sec. 1245 d. Sweetpea has a Section 1231 loss of $1,000. 22. deferred gain provisions of Code Sec. 1031 would likely operate in which of the following transactions? a. Bart exchanges an investment lot for an office building. b. Lisa exchanges stock for a 25-percent interest in a real estate limited partnership. c. Maggie exchanges a drill press used in her trade or business for a jet ski. d. None of the above. 23. Horace reports s 1,100 of ABC Co. dividend income on his return and the IRS receives a copy of his Form 1099 from ABC Co. indicat he received $2.200 in dividends. If his return is selected for ing audit, the method used is: a. the Discrimination Function System (DIF). b, the Frivolous Retum Program. c, the Document Matching Program. d, the Math Emor Program. e. None of the above. 24. Robert and Diane live in Arizona, a community property state. They purchased land as joint tenants in 2006 for $60,000. In 2016, Diane bequeaths her share of the land to Robert. The land has a fair market value of S88.000. What is Robert's adjusted basis for the land? a. S88,000 b. $74,000. c. $60,000 d. $30,000. e. None of the above. 25. Brett owns investment land located in Toronto, Canada. He exchanges it for other investment land. In which of the following locations may the other investment land be located and enable Brett to qualify for 1031 like-kind exchange treatment? a. Tucson, Arizona. b. Seattle, Washinton. c. Paris, France. d. San Antonio, Texas, e. None of the above. 26. In determining the basis of like-kind property received, postponed losses are: a. Added to the basis of the old property. b. Subtracted from the basis of the old property. c. Added to the fair market value of the property received. d. Subtracted from the fair market value of the like-kind property received. e. None of the above