Reference no: EM132592920

Question 1: The seller's gain or loss on repossessed property with a fair market value of $104,000 on the date of repossession, where the seller's basis is $105,000, and the costs of repossession were $1,600, is __________.

A. Gain of $1,000.

B. Loss of $1,000.

C. Loss of $1,600.

D. Loss of $2,600.

Question 2: Olive purchased a van for $15,000 to use exclusively in her delivery business. She sold it four months later in the same year for $10,500. What is the amount of gain or loss, and where on Form 4797 does Olive report the sale?

A. $4,500 gain, Part I.

B. $4,500 gain, Part II.

C. $4,500 loss, Part II.

D. $4,500 loss, Part III

Question 3: Which of the following statements is TRUE regarding recapture for listed property under §280F?

A. No depreciation is claimed for the item for the year in which recapture is made.

B. The year following the year of recapture, use the general depreciation system (GDS), unless business use of the item drops to 50% or less.

C. The year following the year of recapture, use the straight-line (SL) method in the general depreciation system (GDS), as long as the business use of the item is 50% or less.

D. The year of the recapture and in all subsequent years of depreciation, use the straight-line (SL) method over the alternative depreciation system (ADS) recovery period.