Which of the Following Creates Potential § 1245 Depreciation Recapture

question 56

Multiple Choice

Which of the following creates potential § 1245 depreciation recapture and potential § 1231 gain?

• A) Depreciable office furniture held more than one year and sold for more than its original cost.
• B) Amortizable goodwill held more than one year and disposed of for less than its adjusted basis.
• C) Land held more than one year and sold for more than was paid for it.
• D) A note receivable held more than one year and sold for less than was paid for it.
• E) None of the above.

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Definitions:

Supreme Court

The highest judicial body in a jurisdiction, often having the final say in matters of law and constitutionality.

Equal Protection

A constitutional principle that requires states to govern impartially, not drawing distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.

Rational Relationship Test

A legal principle used to determine the constitutionality of a statute, requiring that the law be reasonably related to a legitimate government interest.

Strict Scrutiny Test

A judicial review standard applied to certain laws that potentially infringe upon constitutionally protected rights, requiring the law to be necessary to achieve a compelling governmental interest.