Question 1

Match each statement with the correct term below.
-Personal use property

Accepted Answer

A) Land and structures permanently attached to land. 
B) Property that lacks a physical existence. 
C) Property that is used by the taxpayer for purely personal purposes. 
D) Any property that has form, shape, and substance. 
E) Property with a physical existence that is not real estate.
F)A single property used in more than one category. 
A) Land and structures permanently attached to land. 
B) Property that lacks a physical existence. 
C) Property that is used by the taxpayer for purely personal purposes. 
D) Any property that has form, shape, and substance. 
E) Property with a physical existence that is not real estate.
F)A single property used in more than one category.

Question 2

Robert receives a car as a gift from his mother.The car's purchase price was $20,000,and it was used personally prior to the gift.Robert uses the car 80% of the time in his pizza business.The car's value at the date of the gift is $9,000.What is Robert's basis in the car for depreciation purposes?

Accepted Answer

A) $- 0 - 
B) $7,200 
C) $9,000 
D) $16,000 
E) $20,000 
A) $- 0 - 
B) $7,200 
C) $9,000 
D) $16,000 
E) $20,000

Question 3

Sanford gives Mitchell 100 shares of stock that cost Sanford $5,000 several years ago.On the date of the gift,the stock is valued at $3,000.Mitchell holds the stock until the value increases and sells it for $4,000.What is Mitchell's recognized gain or loss on the sale?

Accepted Answer

A) No gain or (loss) is recognized 
B) $1,000 loss 
C) $1,000 gain 
D) $2,000 loss 
E) $4,000 gain 
A) No gain or (loss) is recognized 
B) $1,000 loss 
C) $1,000 gain 
D) $2,000 loss 
E) $4,000 gain

Question 4

Sandi sells 100 shares of Gray Corporation stock on December 4,2016.She inherited the stock from Christine,who died on January 30,2016.The executor of the estate used the primary valuation date.Sandi's holding period for the stock is

Accepted Answer

A) Long-term. 
B) Short-term. 
C) Long-term if sold at a gain; short-term if sold at a loss. 
D) Short-term if sold at a gain; long-term if sold at a loss. 
A) Long-term. 
B) Short-term. 
C) Long-term if sold at a gain; short-term if sold at a loss. 
D) Short-term if sold at a gain; long-term if sold at a loss.

Question 5

Determine the adjusted basis of the following assets.
a.Dennis buys land by paying $45,000 in cash and assuming a loan for $45,000. He incurs legal fees and commissions of $5,000. He pays $3,000 to have tree seedlings planted on the property. A flood causes $6,000 of damage to the property. Dennis does not carry flood insurance, so he deducts the total loss on his tax return. His property tax liability for this year is $750 and his interest on the loan is $1,850.
b.Tyler buys 100 shares of Oliver Corporation stock at $150 per share plus commissions of $300. At the end of the year, Oliver pays a $10 per share cash dividend and informs shareholders that $6 per share is taxable as a dividend and $4 is a nontaxable dividend.
c.Taylor Corporation acquires an asset for $8,000 in its first year of operation. Since the company suffers a loss during this first year of operation, the bookkeeper decides to deduct only half of the depreciation that was allowable on this asset and claims a depreciation deduction of $800, instead of $1,600.

Accepted Answer

a. @#IMG-DLM& ​
The property tax and interest expe

Question 6

Morrison received a gift of income-producing property with an adjusted basis of $50,000 to the donor and a fair market value of $40,000 on the date of the gift (December 31,2016).The donor paid a gift tax of $1,000.Morrison sells the property on September 17,2017 for $45,000.What is the gain or loss on the property?

Accepted Answer

No gain or loss is recognized on the sal

Question 7

Sammy buys a 20% interest in Duvall Corporation paying $100,000 cash on January 1,2015.During 2015,Duvall Corporation reports a loss of $60,000 and pays cash dividends to shareholders of $5,000.For 2016,Duvall Corporation has income of $200,000 and pays cash dividends of $40,000.If Duvall Company is organized as an S Corporation,Sammy's basis in the Duvall Corporation stock at the end of 2016 is:

Accepted Answer

A) $88,000 
B) $89,000 
C) $100,000 
D) $119,000 
E) $128,000 
A) $88,000 
B) $89,000 
C) $100,000 
D) $119,000 
E) $128,000

Question 8

Hilliard receives a gift of stock from Martha on June 1 of the current year.Martha paid $15,000 for the stock several years ago.Martha pays a gift tax of $400 on the transfer.
I.If the fair market value of the stock on June 1 of the current year is $20,000,Hilliard has a basis in the stock of $15,100.
II.If the fair market value of the stock on June 1 of the current year is $14,000,and Hilliard sells the stock for $13,000 on June 2 of the current year,Hilliard realizes a loss on the sale of $1,000.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 9

Determine the proper classification(s)of a house owned and used by John as his principal residence.
I.Personal use property.
IV.Intangible property.
II.Business use property.
V.Real estate.
III.Tangible property.
VI.Personal property.
​

Accepted Answer

A) Statements I, III, and V are correct. 
B) Statements I, III, and VI are correct. 
C) Only statement I and V are correct. 
D) Only statement V is correct. 
E) Only statement I is correct. 
A) Statements I, III, and V are correct. 
B) Statements I, III, and VI are correct. 
C) Only statement I and V are correct. 
D) Only statement V is correct. 
E) Only statement I is correct.

Question 10

Harold purchases land and a building by paying cash of $35,000,and assuming the seller's $82,000 mortgage.In addition,Harold pays $3,000 of legal fees related to the purchase.For property tax purposes,the land is valued at $17,000 and the building at $34,000.Harold's basis in the building is

Accepted Answer

A) $17,000 
B) $34,000 
C) $40,000 
D) $80,000 
E) $120,000 
A) $17,000 
B) $34,000 
C) $40,000 
D) $80,000 
E) $120,000

Question 11

An asset's holding period normally begins on the day after it is acquired and ends on the day of its disposition.

Accepted Answer

A) True 
 B)False

Question 12

Match each statement with the correct term below.
-Intangible property

Accepted Answer

A) Land and structures permanently attached to land. 
B) Property that lacks a physical existence. 
C) Property that is used by the taxpayer for purely personal purposes. 
D) Any property that has form, shape, and substance. 
E) Property with a physical existence that is not real estate.
F)A single property used in more than one category. 
A) Land and structures permanently attached to land. 
B) Property that lacks a physical existence. 
C) Property that is used by the taxpayer for purely personal purposes. 
D) Any property that has form, shape, and substance. 
E) Property with a physical existence that is not real estate.
F)A single property used in more than one category.

Question 13

Mary inherits an interest in Laser Partnership from her Aunt Lillian during 2016.The fair market value of the interest as of the primary valuation date is $28,000.Aunt Lillian's adjusted basis was $16,000.What is Mary's initial basis and holding period in the partnership interest if she sells the interest seven months after inheriting it?

Accepted Answer

A) $16,000, short-term. 
B) $16,000, long-term. 
C) $28,000, short-term. 
D) $28,000, long-term. 
E) Both depend on whether it is sold at a gain or a loss. 
A) $16,000, short-term. 
B) $16,000, long-term. 
C) $28,000, short-term. 
D) $28,000, long-term. 
E) Both depend on whether it is sold at a gain or a loss.

Question 14

Personal property consists of any property that is held by an individual.

Accepted Answer

A) True 
 B)False

Question 15

Brad,an engineering consultant,was given stock valued at $3,000 for services rendered.His basis in the stock he received for the services is zero since he received no cash.

Accepted Answer

A) True 
 B)False

Question 16

Sarah gave her granddaughter,Alice,some Eli Lilly Co.stock last year when its fair market value was $25,000.Gift taxes of $4,000 were paid on this transfer.Sarah acquired the stock in 2004 at a cost of $35,000.Alice sold the Eli Lilly stock this year for $32,000.What amount of gain (loss)will Alice recognize from her sale of the stock?

Accepted Answer

A) No gain or loss is recognized. 
B) $7,000 
C) ($7,000) 
D) ($3,000) 
A) No gain or loss is recognized. 
B) $7,000 
C) ($7,000) 
D) ($3,000)

Question 17

Match each statement with the correct term below.
-Holding period

Accepted Answer

A) Begins on the day after acquisition and ends on the day of disposition. 
B) The initial investment in an asset. 
C) An asset's basis transfers from one owner to another. 
D) The capital investment remaining in an asset at the date of its disposition. 
E) Sales price less expenses of disposition.
F)A purchase of all of the assets of a business.
G)Amount realized is less than adjusted basis.
H)A purchase of all of the assets of a business by buying the stock of a corporation.
I)A term used to identify a situation in which an asset has a different basis for determining gain than for determining loss.
J)The date of death used to value a decedent's estate in the absence of any special election.
K)Six months after the date of death, used to value a decedent's estate when the executor of the estate makes election.
L)Amount realized is greater than adjusted basis. 
A) Begins on the day after acquisition and ends on the day of disposition. 
B) The initial investment in an asset. 
C) An asset's basis transfers from one owner to another. 
D) The capital investment remaining in an asset at the date of its disposition. 
E) Sales price less expenses of disposition.
F)A purchase of all of the assets of a business.
G)Amount realized is less than adjusted basis.
H)A purchase of all of the assets of a business by buying the stock of a corporation.
I)A term used to identify a situation in which an asset has a different basis for determining gain than for determining loss.
J)The date of death used to value a decedent's estate in the absence of any special election.
K)Six months after the date of death, used to value a decedent's estate when the executor of the estate makes election.
L)Amount realized is greater than adjusted basis.

Question 18

Kobe receives a gift of rare books valued at $10,000.The books have an adjusted basis of $6,000 to the donor.Several months later,Kobe sells the books to a professional collector for $7,000.What is Kobe' gain or (loss)on the sale?

Accepted Answer

A) No gain or (loss) is recognized 
B) $1,000 gain 
C) $4,000 gain 
D) $1,000 loss 
E) $3,000 loss 
A) No gain or (loss) is recognized 
B) $1,000 gain 
C) $4,000 gain 
D) $1,000 loss 
E) $3,000 loss

Question 19

Perry inherits stock from his Aunt Margaret that had a basis of $40,000 to Margaret and a fair market value of $54,000 on May 20,2016,the date of her death.Paul sells the stock on June 21,2016 for $65,000.What is the amount and character of the gain or loss on the sale?

Accepted Answer

$11,000 ($65,000 - $54,000)lon

Question 20

Jose is exploring his options to minimize his tax liability for this year.Earlier in the year Jose sold a substantial number of his securities and recognized a $15,000 gain.He would like to mitigate the tax effects of that gain.The remainder of Jose's portfolio consists of 1,000 shares of Garfield Corporation stock.Jose has not sold it because it has a history of paying large dividends.Jose paid $20,000 for the stock,but it is currently trading for $5 per share.Jose is considering selling all of his Garfield stock,realizing the loss,netting it against his capital gains,and then repurchasing 1,000 shares a few days later.He knows he will lose some money due to transaction and brokerage costs,but he feels it may be worth it.Discuss Jose's plan.Relate your analysis to the basic tax concepts that help drive your position.

Accepted Answer

The plan will not work.The plan is a was

Match each statement with the correct term below. -Personal use property

Robert receives a car as a gift from his mother.The car's purchase price was $20,000,and it was used personally prior to the gift.Robert uses the car 80% of the time in his pizza business.The car's value at the date of the gift is $9,000.What is Robert's basis in the car for depreciation purposes?

Sanford gives Mitchell 100 shares of stock that cost Sanford $5,000 several years ago.On the date of the gift,the stock is valued at $3,000.Mitchell holds the stock until the value increases and sells it for $4,000.What is Mitchell's recognized gain or loss on the sale?

Sandi sells 100 shares of Gray Corporation stock on December 4,2016.She inherited the stock from Christine,who died on January 30,2016.The executor of the estate used the primary valuation date.Sandi's holding period for the stock is

Determine the proper classification(s)of a house owned and used by John as his principal residence. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.

Harold purchases land and a building by paying cash of $35,000,and assuming the seller's $82,000 mortgage.In addition,Harold pays $3,000 of legal fees related to the purchase.For property tax purposes,the land is valued at $17,000 and the building at $34,000.Harold's basis in the building is

An asset's holding period normally begins on the day after it is acquired and ends on the day of its disposition.

Match each statement with the correct term below. -Intangible property

Personal property consists of any property that is held by an individual.

Brad,an engineering consultant,was given stock valued at $3,000 for services rendered.His basis in the stock he received for the services is zero since he received no cash.

Match each statement with the correct term below. -Holding period

Kobe receives a gift of rare books valued at $10,000.The books have an adjusted basis of $6,000 to the donor.Several months later,Kobe sells the books to a professional collector for $7,000.What is Kobe' gain or (loss)on the sale?

Perry inherits stock from his Aunt Margaret that had a basis of $40,000 to Margaret and a fair market value of $54,000 on May 20,2016,the date of her death.Paul sells the stock on June 21,2016 for $65,000.What is the amount and character of the gain or loss on the sale?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Choice of Business Entity-Other Considerations

Tax Research

Filters

Exam 9: Acquisitions of Property

Match each statement with the correct term below. -Personal use property

Robert receives a car as a gift from his mother.The car's purchase price was $20,000,and it was used personally prior to the gift.Robert uses the car 80% of the time in his pizza business.The car's value at the date of the gift is $9,000.What is Robert's basis in the car for depreciation purposes?

Sanford gives Mitchell 100 shares of stock that cost Sanford $5,000 several years ago.On the date of the gift,the stock is valued at $3,000.Mitchell holds the stock until the value increases and sells it for $4,000.What is Mitchell's recognized gain or loss on the sale?

Sandi sells 100 shares of Gray Corporation stock on December 4,2016.She inherited the stock from Christine,who died on January 30,2016.The executor of the estate used the primary valuation date.Sandi's holding period for the stock is

Determine the proper classification(s)of a house owned and used by John as his principal residence. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property. ​

Harold purchases land and a building by paying cash of $35,000,and assuming the seller's $82,000 mortgage.In addition,Harold pays $3,000 of legal fees related to the purchase.For property tax purposes,the land is valued at $17,000 and the building at $34,000.Harold's basis in the building is

An asset's holding period normally begins on the day after it is acquired and ends on the day of its disposition.

Match each statement with the correct term below. -Intangible property

Personal property consists of any property that is held by an individual.

Brad,an engineering consultant,was given stock valued at $3,000 for services rendered.His basis in the stock he received for the services is zero since he received no cash.

Match each statement with the correct term below. -Holding period

Kobe receives a gift of rare books valued at $10,000.The books have an adjusted basis of $6,000 to the donor.Several months later,Kobe sells the books to a professional collector for $7,000.What is Kobe' gain or (loss)on the sale?

Perry inherits stock from his Aunt Margaret that had a basis of $40,000 to Margaret and a fair market value of $54,000 on May 20,2016,the date of her death.Paul sells the stock on June 21,2016 for $65,000.What is the amount and character of the gain or loss on the sale?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Choice of Business Entity-Other Considerations

Tax Research

Filters

Determine the proper classification(s)of a house owned and used by John as his principal residence. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.