Question 1

Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.

Accepted Answer

If the buyer assumes the seller's liabil

Question 2

The basis for gain and loss of personal use property converted to business use is the lower of the adjusted basis or the fair market value on the date of conversion.

Accepted Answer

A) True 
 B)False

Question 3

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Accepted Answer

In this circumstance, the easiest way fo

Question 4

Ben sells stock (adjusted basis of $25,000) to his son, Ray, for its fair market value of $15,000. Ray gives the stock to his daughter, Trish, who subsequently sells it for $26,000. Ben's recognized loss is $0 and Trish's recognized gain is $1,000 ($26,000 - $15,000 - $10,000).

Accepted Answer

A) True 
 B)False

Question 5

Maurice sells his personal use automobile at a realized loss. Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?

Accepted Answer

Under no circumstance can Maurice recogn

Question 6

The basis of property acquired in a wash sale is its cost plus the loss not recognized on the wash sale.

Accepted Answer

A) True 
 B)False

Question 7

A realized gain on the sale or exchange of a personal use asset is recognized, but a realized loss on the sale, exchange, or condemnation of a personal use asset is not recognized.

Accepted Answer

A) True 
 B)False

Question 8

Albert purchased a tract of land for $140,000 in 2014 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000. Highway engineers surveyed the property and indicated that he would probably get $180,000. The highway project was abandoned in 2017 and the value of the land fell to $100,000. What is the amount of loss Albert can claim in 2017?

Accepted Answer

A) $40,000 
B) $60,000 
C) $80,000 
D) $100,000 
E) None of the above 
A) $40,000 
B) $60,000 
C) $80,000 
D) $100,000 
E) None of the above

Question 9

Realized gain or loss is measured by the difference between the amount realized from the sale or other disposition of property and the property's adjusted basis at the date of disposition.

Accepted Answer

A) True 
 B)False

Question 10

Define a bargain purchase of property and discuss the related tax consequences.

Accepted Answer

A bargain purchase can occur when an emp

Question 11

The basis of personal use property converted to business use is:

Accepted Answer

A) Always the lower of its adjusted basis or fair market value on the date of conversion. 
B) Always its adjusted basis on the date of conversion. 
C) Always its fair market value on the date of conversion. 
D) Always the higher of its adjusted basis or fair market value on the date of conversion. 
E) None of the above. 
A) Always the lower of its adjusted basis or fair market value on the date of conversion. 
B) Always its adjusted basis on the date of conversion. 
C) Always its fair market value on the date of conversion. 
D) Always the higher of its adjusted basis or fair market value on the date of conversion. 
E) None of the above.

Question 12

In addition to other gifts, Megan made a gift of stock to Jeri in 1976. Megan had purchased the stock in 1974 for $7,500. At the time of the gift, the stock was worth $20,000. If Megan paid $850 of gift tax on the transaction in 1976, what is Jeri's gain basis for the stock?

Accepted Answer

A) $7,500 
B) $8,350 
C) $9,017 
D) $20,000 
E) None of the above 
A) $7,500 
B) $8,350 
C) $9,017 
D) $20,000 
E) None of the above

Question 13

Mary sells her personal use automobile for $20,000. She purchased the car two years ago for $17,000. What is Mary's recognized gain or loss? It increased in value due to its excellent mileage, yet safe design.

Accepted Answer

A) $0 
B) $3,000 
C) $17,000 
D) $20,000 
E) None of the above 
A) $0 
B) $3,000 
C) $17,000 
D) $20,000 
E) None of the above

Question 14

The amount received for a utility easement on land is included in the gross income of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 15

Abby sells real property for $300,000. The buyer pays $5,000 in property taxes that had accrued during the year while the property was still legally owned by Abby. In addition, Abby pays $15,000 in commissions and $3,000 in legal fees in connection with the sale. How much does Abby realize (the amount realized) from the sale of her property?

Accepted Answer

A) $277,000 
B) $282,000 
C) $287,000 
D) $300,000 
E) None of the above 
A) $277,000 
B) $282,000 
C) $287,000 
D) $300,000 
E) None of the above

Question 16

Noelle owns an automobile which she uses for personal use. Her adjusted basis is $45,000 (i.e., the original cost). The car is worth $22,000. Which of the following statements is correct?

Accepted Answer

A)  If Noelle sells the car for $22,000, her realized loss of $23,000 is not recognized. 
B)  If Noelle exchanges the car for another car worth $22,000, her realized loss of $23,000 is not recognized. 
C)  If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss of $23,000. 
D)  Only a. and b. are correct. 
E)  a., b., and c. are correct. 
A)  If Noelle sells the car for $22,000, her realized loss of $23,000 is not recognized. 
B)  If Noelle exchanges the car for another car worth $22,000, her realized loss of $23,000 is not recognized. 
C)  If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss of $23,000. 
D)  Only a. and b. are correct. 
E)  a., b., and c. are correct.

Question 17

​Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.

Accepted Answer

​
The brother is a related party under t

Question 18

Hubert purchases Fran's jewelry store for $950,000. The identifiable assets of the business are as follows:
​
Hubert and Fran agree to assign $110,000 to a 7-year covenant not to compete. How should Hubert allocate the $950,000 purchase price to the assets?

Accepted Answer

The purchase price is allocate

Question 19

Which of the following statements is false?

Accepted Answer

A) A realized gain that is never recognized results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
B) A realized gain on which recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
C) A realized loss that is never recognized results in the permanent recovery of less than the taxpayer's cost or other basis for tax purposes. 
D) A realized loss on which recognition is postponed results in the temporary recovery of less than the taxpayer's cost or other basis for tax purposes. 
E) All of the above. 
A) A realized gain that is never recognized results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
B) A realized gain on which recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
C) A realized loss that is never recognized results in the permanent recovery of less than the taxpayer's cost or other basis for tax purposes. 
D) A realized loss on which recognition is postponed results in the temporary recovery of less than the taxpayer's cost or other basis for tax purposes. 
E) All of the above.

Question 20

Noelle received dining room furniture as a gift from her friend, Jane. Jane's adjusted basis was $9,200 and the fair market value on the date of the gift was $7,000. Noelle decided she did not need the furniture and sold it to a neighbor six months later for $6,500. What is her recognized gain or loss?

Accepted Answer

A) $0 
B) ($500) 
C) ($2,700) 
D) $6,500 
E) None of the above 
A) $0 
B) ($500) 
C) ($2,700) 
D) $6,500 
E) None of the above

Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.

The basis for gain and loss of personal use property converted to business use is the lower of the adjusted basis or the fair market value on the date of conversion.

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Ben sells stock (adjusted basis of $25,000) to his son, Ray, for its fair market value of $15,000. Ray gives the stock to his daughter, Trish, who subsequently sells it for $26,000. Ben's recognized loss is $0 and Trish's recognized gain is $1,000 ($26,000 - $15,000 - $10,000).

Maurice sells his personal use automobile at a realized loss. Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?

The basis of property acquired in a wash sale is its cost plus the loss not recognized on the wash sale.

A realized gain on the sale or exchange of a personal use asset is recognized, but a realized loss on the sale, exchange, or condemnation of a personal use asset is not recognized.

Realized gain or loss is measured by the difference between the amount realized from the sale or other disposition of property and the property's adjusted basis at the date of disposition.

Define a bargain purchase of property and discuss the related tax consequences.

The basis of personal use property converted to business use is:

In addition to other gifts, Megan made a gift of stock to Jeri in 1976. Megan had purchased the stock in 1974 for $7,500. At the time of the gift, the stock was worth $20,000. If Megan paid $850 of gift tax on the transaction in 1976, what is Jeri's gain basis for the stock?

Mary sells her personal use automobile for $20,000. She purchased the car two years ago for $17,000. What is Mary's recognized gain or loss? It increased in value due to its excellent mileage, yet safe design.

The amount received for a utility easement on land is included in the gross income of the taxpayer.

Noelle owns an automobile which she uses for personal use. Her adjusted basis is $45,000 (i.e., the original cost). The car is worth $22,000. Which of the following statements is correct?

Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.

Hubert purchases Fran's jewelry store for $950,000. The identifiable assets of the business are as follows: Hubert and Fran agree to assign $110,000 to a 7-year covenant not to compete. How should Hubert allocate the $950,000 purchase price to the assets?

Which of the following statements is false?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 14: Property Transactions: Determination of Gain or Loss and Basis Considerations

Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.

The basis for gain and loss of personal use property converted to business use is the lower of the adjusted basis or the fair market value on the date of conversion.

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Ben sells stock (adjusted basis of $25,000) to his son, Ray, for its fair market value of $15,000. Ray gives the stock to his daughter, Trish, who subsequently sells it for $26,000. Ben's recognized loss is $0 and Trish's recognized gain is $1,000 ($26,000 - $15,000 - $10,000).

Maurice sells his personal use automobile at a realized loss. Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?

The basis of property acquired in a wash sale is its cost plus the loss not recognized on the wash sale.

A realized gain on the sale or exchange of a personal use asset is recognized, but a realized loss on the sale, exchange, or condemnation of a personal use asset is not recognized.

Realized gain or loss is measured by the difference between the amount realized from the sale or other disposition of property and the property's adjusted basis at the date of disposition.

Define a bargain purchase of property and discuss the related tax consequences.

The basis of personal use property converted to business use is:

In addition to other gifts, Megan made a gift of stock to Jeri in 1976. Megan had purchased the stock in 1974 for $7,500. At the time of the gift, the stock was worth $20,000. If Megan paid $850 of gift tax on the transaction in 1976, what is Jeri's gain basis for the stock?

Mary sells her personal use automobile for $20,000. She purchased the car two years ago for $17,000. What is Mary's recognized gain or loss? It increased in value due to its excellent mileage, yet safe design.

The amount received for a utility easement on land is included in the gross income of the taxpayer.

Noelle owns an automobile which she uses for personal use. Her adjusted basis is $45,000 (i.e., the original cost). The car is worth $22,000. Which of the following statements is correct?

​Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.

Hubert purchases Fran's jewelry store for $950,000. The identifiable assets of the business are as follows: ​ Hubert and Fran agree to assign $110,000 to a 7-year covenant not to compete. How should Hubert allocate the $950,000 purchase price to the assets?

Which of the following statements is false?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.

Hubert purchases Fran's jewelry store for $950,000. The identifiable assets of the business are as follows: Hubert and Fran agree to assign $110,000 to a 7-year covenant not to compete. How should Hubert allocate the $950,000 purchase price to the assets?