Question 1

A wash sale occurs when:

Accepted Answer

A) A taxpayer sells and buys substantially identical stock. 
B) A taxpayer sells stock and buys substantially identical stock within 30 days before or after the sale. 
C) A taxpayer sells stock and buys substantially identical stock within 60 days before or after the sale. 
D) When a taxpayer sells stock at the end of the year to offset a gain recognized earlier in the year. 
A) A taxpayer sells and buys substantially identical stock. 
B) A taxpayer sells stock and buys substantially identical stock within 30 days before or after the sale. 
C) A taxpayer sells stock and buys substantially identical stock within 60 days before or after the sale. 
D) When a taxpayer sells stock at the end of the year to offset a gain recognized earlier in the year.

Question 2

Richard's business is condemned by the state on July 10,2017,as part of a plan to add a highway loop around the city.His adjusted basis in his business is $500,000.He receives condemnation proceeds of $610,000 on August 30,2017.He purchases another business for $575,000 on September 15,2017.
a.What is Richard's realized and recognized gain or loss?
b.What is Richard's basis in the new business?

Accepted Answer

a.$110,000 realized ($610,000

Question 3

An apartment building with an adjusted basis of $500,000 was destroyed by a tornado on April 30,2017.On May 10,2017,the insurance company paid the owner $695,000.The owner reinvested $570,000 in a new apartment complex.What is the basis of the new complex if non-recognition of gain from an involuntary conversion is elected?

Accepted Answer

A) $500,000. 
B) $570,000. 
C) $625,000. 
D) $695,000. 
A) $500,000. 
B) $570,000. 
C) $625,000. 
D) $695,000.

Question 4

On December 28,2017,Shelia sold 300 shares of Power Inc.(a publicly traded company)at a loss of $5,900.On January 5,2018,Shelia repurchased 300 shares of Power Inc.

Accepted Answer

A) The $5,900 loss is disallowed. 
B) The $5,900 loss is only allowed if Shelia has capital gains to offset the loss. 
C) The $5,900 loss is only allowed if Shelia's AGI is less than $100,000. 
D) Only $3,000 of the loss is allowed. 
A) The $5,900 loss is disallowed. 
B) The $5,900 loss is only allowed if Shelia has capital gains to offset the loss. 
C) The $5,900 loss is only allowed if Shelia's AGI is less than $100,000. 
D) Only $3,000 of the loss is allowed.

Question 5

Which of the following relationships are considered related parties?

Accepted Answer

A) A brother and sister. 
B) A corporation and a 100% shareholder. 
C) A partnership and a 66% partner. 
D) All of these are related parties. 
A) A brother and sister. 
B) A corporation and a 100% shareholder. 
C) A partnership and a 66% partner. 
D) All of these are related parties.

Question 6

The like-kind exchange provisions are elective provisions.

Accepted Answer

A) True 
 B)False

Question 7

If a taxpayer trades a personal-use asset for another asset,the exchange does not qualify as a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 8

The purpose of the wash sale rules is to disallow a tax loss on the sale of securities where the ownership of a company is not reduced.

Accepted Answer

A) True 
 B)False

Question 9

When a loss is disallowed under the wash sale rules,

Accepted Answer

A) The loss is lost forever. 
B) The loss is carried over indefinitely. 
C) The loss is added to the basis of the newly acquired stock. 
D) None of these. 
A) The loss is lost forever. 
B) The loss is carried over indefinitely. 
C) The loss is added to the basis of the newly acquired stock. 
D) None of these.

Question 10

The contract price in an installment sale is:

Accepted Answer

A) The selling price or the selling price reduced by any debt assumed by the buyer. 
B) The selling price less the basis in the property. 
C) The selling price less any selling expenses. 
D) The gross profit divided by the selling price. 
A) The selling price or the selling price reduced by any debt assumed by the buyer. 
B) The selling price less the basis in the property. 
C) The selling price less any selling expenses. 
D) The gross profit divided by the selling price.

Question 11

Jasmine sold land for $250,000 in 2017.The land had a basis of $118,000 and she incurred selling expenses of $10,000.Jasmine received $50,000 down in 2017 and will receive five additional annual payments of $40,000 each.How much income will Jasmine recognize in 2018 when she receives the first additional payment of $40,000?

Accepted Answer

A) $0. 
B) $18,880. 
C) $19,520. 
D) $40,000. 
A) $0. 
B) $18,880. 
C) $19,520. 
D) $40,000.

Question 12

Lee sells equipment (basis $10,000)to related party,Lee Construction Inc. ,for $6,000.The $4,000 loss is:

Accepted Answer

A) Deductible by Lee on his individual return. 
B) Not deductible by Lee but Lee Construction has a basis of $10,000 in the asset. 
C) Not deductible by Lee but Lee Construction has a basis of $6,000 in the asset. 
D) None of these. 
A) Deductible by Lee on his individual return. 
B) Not deductible by Lee but Lee Construction has a basis of $10,000 in the asset. 
C) Not deductible by Lee but Lee Construction has a basis of $6,000 in the asset. 
D) None of these.

Question 13

No deduction is allowed with respect to any loss from the sale or exchange of property,directly or indirectly,between related parties.

Accepted Answer

A) True 
 B)False

Question 14

Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

Accepted Answer

A) 10%. 
B) 25%. 
C) 75%. 
D) 100%. 
A) 10%. 
B) 25%. 
C) 75%. 
D) 100%.

Question 15

The time period to replace property destroyed in an involuntary conversion is two years from the event.

Accepted Answer

A) True 
 B)False

A wash sale occurs when:

On December 28,2017,Shelia sold 300 shares of Power Inc.(a publicly traded company)at a loss of $5,900.On January 5,2018,Shelia repurchased 300 shares of Power Inc.

Which of the following relationships are considered related parties?

The like-kind exchange provisions are elective provisions.

If a taxpayer trades a personal-use asset for another asset,the exchange does not qualify as a like-kind exchange.

The purpose of the wash sale rules is to disallow a tax loss on the sale of securities where the ownership of a company is not reduced.

When a loss is disallowed under the wash sale rules,

The contract price in an installment sale is:

Lee sells equipment (basis $10,000)to related party,Lee Construction Inc. ,for $6,000.The $4,000 loss is:

No deduction is allowed with respect to any loss from the sale or exchange of property,directly or indirectly,between related parties.

Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

The time period to replace property destroyed in an involuntary conversion is two years from the event.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 12: Special Property Transactions

A wash sale occurs when:

On December 28,2017,Shelia sold 300 shares of Power Inc.(a publicly traded company)at a loss of $5,900.On January 5,2018,Shelia repurchased 300 shares of Power Inc.

Which of the following relationships are considered related parties?

The like-kind exchange provisions are elective provisions.

If a taxpayer trades a personal-use asset for another asset,the exchange does not qualify as a like-kind exchange.

The purpose of the wash sale rules is to disallow a tax loss on the sale of securities where the ownership of a company is not reduced.

When a loss is disallowed under the wash sale rules,

The contract price in an installment sale is:

Lee sells equipment (basis $10,000)to related party,Lee Construction Inc. ,for $6,000.The $4,000 loss is:

No deduction is allowed with respect to any loss from the sale or exchange of property,directly or indirectly,between related parties.

Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

The time period to replace property destroyed in an involuntary conversion is two years from the event.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters