13 Jan (TCO 11) Tammy, who is

Question 1. Question :

(TCO 6) Alice owns land with an adjusted basis of $305,000, subject to a mortgage of $175,000. Real estate taxes are $4,500 per calendar year and are payable on December 31. On April 1, 20X2, Alice sells her land subject to the mortgage for $325,000 in cash, a note for $300,000, and property with a fair market value of $60,000. What is the amount realized?

$685,000

$686,110

$860,000

$861,110

None of the above

Question 2. Question :

(TCO 6) Frank’s automobile (adjusted basis of $8,000) was used exclusively for business and was damaged in an accident. The fair market value before the accident was $10,000, and the fair market value after was $500. If the insurance recovery was $9,500, then what was Frank’s adjusted basis in the automobile after the casualty?

$0

$1,500

$8,000

($1,500)

None of the above

Question 3. Question :

(TCO 6) Which of the following is correct?

The gain basis for property received by gift is the lesser of the donor’s basis or the fair market value on the date of the gift.

The loss basis for property received by gift is the same as the donor’s basis.

The gain basis for inherited property is the same as the decedent’s basis.

The loss basis for inherited property is the lesser of the decedent’s basis or the fair market value on the date of the decedent’s death.

None of the above

Question 4. Question :

(TCO 6) Tobin inherited 100 acres of land on the death of his father in 20X2. A federal estate tax return was filed, and the land was valued at $150,000 (its fair market value at the date of the death). The father had originally acquired the land in 1963 for $12,000 and, prior to his death, had made permanent improvements of $3,000. What is Tobin’s basis in the land?

$12,000

$15,000

$150,000

$165,000

None of the above

Question 5. Question :

(TCO 6) The basis of personal-use property converted to business use is _____.

always the lower of its adjusted basis or fair market value on the date of conversion

always its adjusted basis on the date of conversion

always its fair market value on the date of conversion

always the higher of its adjusted basis or fair market value on the date of conversion

None of the above

Question 6. Question :

(TCO 6) In order to qualify for like-kind exchange treatment under § 1031, which of the following requirements must be satisfied?

The form of the transaction is an exchange.

Both the property transferred and the property received are held either for productive use in a trade or business or for investment.

The exchange must be completed by the end of the second tax year following the tax year in which the taxpayer relinquishes his or her like-kind property.

A and B

A, B, and C

Question 7. Question :

(TCO 11) Lynn purchases a house for $52,000. She converts the property to rental property when the fair market value is $115,000. After deducting depreciation (cost recovery) expense of $1,130, she sells the house for $120,000. What is her recognized gain or loss?

$0

$6,130

$37,630

$69,130

None of the above

Question 8. Question :

(TCO 11) If boot is received in a § 1031 like-kind exchange, and gain is recognized, then which formula correctly calculates the basis for the like-kind property received?

Adjusted basis of like-kind property surrendered + gain recognized – fair market value of boot received

Fair market value of like-kind property surrendered + gain recognized – fair market value of boot received

Fair market value of like-kind property received – postponed gain

A and C

None of the above

Question 9. Question :

(TCO 11) During 20X2, Ted and Judy, a married couple, decided to sell their residence, which had a basis of $162,000. They had owned and occupied the residence for 11 years. To make it more attractive to prospective buyers, they had it painted in April at a cost of $5,000 and paid for the work immediately. They sold the house in May for $395,000. Broker’s commissions and other selling expenses amounted to $24,000. They purchased a new residence in June for $350,000. What is the adjusted basis of the new residence?

$0

$141,000

$146,000

$151,000

None of the above

Question 10. Question :

(TCO 11) Tammy, who is single, sells her personal residence (adjusted basis of $130,000) for $290,000. She has owned and lived in the residence for 3 years. Her selling expenses are $18,000. Three weeks prior to the sale, Tammy paid a carpenter and a painter $1,000 to make some repairs and paint the two bathrooms. Her recognized gain is _____.

$142,000

$0

$141,000

$139,000

None of the above