What is Patty’s basis in the house if after taking $10,000 of depreciation deductions she sells it for $66,000? $60,0 00
Question
QUESTION 1 No taxable income results from a stock split.
QUESTION 2 A loss incurred on the sale of a personal residence is not deductible.
QUESTION 3 If a taxpayer cannot specifically identify which shares of stock were sold, the
average cost of all shares held is used as the adjusted basis of the shares
that were sold.
QUESTION 4 The taxpayer’s basis in gifted property depends on whether the fair market
value of the gifted property is greater than or less than the donor’s adjusted
basis in the property.
QUESTION 5 The like-kind exchange rules are elective.
QUESTION 6 Years ago, Fran purchased stock in ABC company for $33,000. Last year, Fran
sold the stock to her son, Steve, for $25,000 (its current market value). Steve
later sells the shares for $20,000. Steve’s adjusted basis in the stock and his
recognized gain or loss on the sale are:
$33,000adjusted
recognized loss
$33,000adjusted
recognized loss
$25,000adjusted
recognized loss
$25,000adjusted
recognized loss
$33,000adjusted
gain basis, $13,000
basis, $5,000
basis, $13,000
basis, $5,000
basis, $0 recognized QUESTION 7 Patty converted her main home to rental property two years ago when it
was worth $70,000. Patty paid $85,000 for the house. What is Patty’s
basis in the house if after taking $10,000 of depreciation deductions she
sells it for $66,000? $60,0
00
$66,0
00
$70,0
00
$75,0
00
$85,0
00 QUESTION 8 Clara sold 200 shares of ABC stock for $22,500. Clara’s investment
portfolio includes the following purchases of ABC stock:
200
6
200
8
201
2
201
3 100 shares at $100
per share
50 shares at $110 per
share
125 shares at $130
per share
75 shares at $125 per
share Assuming Clara does not identify which shares she sold, she will
recognize:
no gain or
loss.
a $500 gain.
a $1,000 loss.
a $3,125 loss.
none of the
above.
QUESTION 9 Mr. and Mrs. Axelson sold their main home in January 2015 for $325,000.
Selling expenses were $20,000. The Axelsons purchased the house 30
years ago for $40,000. The gain reported on the Axelsons’ joint tax return
is: $0.
$15,000.
$35,000
$265,000.
none of the
above.
1 points QUESTION 10 Riley exchanged an apartment building with an adjusted basis of
$100,000 and a fair market value of $200,000 for a rental house valued at
$180,000 and cash of $20,000. What is Riley’s recognized gain and basis
of the rental beach house?
$0 and $100,000
$0 and $180,000
$20,000 and
$100,000
$20,000 and
$180,000
None of the
above
1 points QUESTION 11 Which of the following is not taken into consideration in computing the
seller’s amount realized from the exchange of property?
Debt that the buyer assumes
Commissions paid by the seller
Legal fees paid by the seller in conjunction with the sale
All of the above are taken into consideration in computing
amount realized
None of the above are taken into consideration in computing
amount realized
1 points QUESTION 12 A taxpayer pays $200,000 for real property. The market value of the land
and building purchased are $120,000 and $180,000, respectively. The
taxpayer’s basis in the land and building are:
$120,000 and $180,000,
respectively. $180,000 and $120,000,
respectively.
$120,000 and $80,000,
respectively.
$80,000 and $120,000,
respectively.
None of the above.
1 points QUESTION 13 Several years ago, Kurt paid $15,000 for 1,000 shares of stock in ABC.
During the current year ABC declares a three-for-one stock split. Shortly
thereafter, Kurt sells 1,000 shares of ABC stock for $12,000. His
recognized gain on the sale of the 1,000 shares is:
$7,000
.
$2,000
.
$0.
$12,00
0.
$5,000
.
1 points QUESTION 14 Joel’s main home is destroyed in a tornado in a federally declared disaster
area. The insurance company compensates Joel for his loss in 2015, which
produces a $350,000 realized gain. How long does Joel have to purchase a
new principal residence and avoid being taxed on the gain?
December
2015
December
2016
December
2017
December
2018
December
2019 31,
31,
31,
31,
31,
1 points QUESTION 15 Yang converted her personal residence to rental property ten years ago.
At the time of conversion, the fair market value of the house was $60,000.
After taking depreciation deductions of $12,000, Yang sells the house for
$68,000. If Yang paid $50,000 for the house, her adjusted basis in the
house is:
$30,00
0.
$38,00
0.
$48,00
0.
$50,00
0.
$60,00
0.
1 points QUESTION 16 Nate sold his main home for $400,000. He paid commissions totaling
$20,000. Nate, who is single, purchased the home 15 years ago for
$110,000. Over the years, he has spent $13,000 on improvements and
$22,000 on repairs to the home. Nate’s recognized gain is:
$0
$20,00
0.
$7,000.
$270,0
00.
$257,0
00.
QUESTION 17 A taxpayer cannot recognize the loss on the sale of stock if the taxpayer
purchases substantially identical stock within 60 days before or 60 days
after the sale.
True or False?
QUESTION 18
A taxpayer’s grocery store was destroyed by a tornado in March. The adjusted basis of
the store was $300,000. In April, the insurance company paid $400,000 to cover the loss. If the taxpayer wants to postpone as much gain as possible, $____________ must be
invested in qualified replacement property. QUESTION 19 If no gift tax is paid on the transfer, the basis of appreciated property
acquired as a gift is the donor’s basis.
True or False?
QUESTION 20 Taxpayers have two years from the date of the involuntary conversion to
reinvest the proceeds if they intend to avoid recognizing the realized gain.
True or false?
QUESTION 21 In a like-kind exchange, the amount of recognized gain equals the amount of
boot received.
True or False?
QUESTION 22 Legal fees paid in connection with the purchase of property are subtracted
from the buyer’s basis in the property.
True or False?
QUESTION 23 Only stock held at least 10 years qualifies for the exclusion on the sale of
Section 1202 (small business) stock.
True or False?
QUESTION 24 A disallowed loss resulting from a sale between related parties is added to
the buyer’s basis in the property acquired.
True or False? QUESTION 25
The alternative valuation date is ____________ after the date of the decedent’s death. QUESTION 26
To qualify for the exclusion of the gain from the sale of a main home, the home must have been used as
the taxpayer’s main home for ____________ of the past____________ years. QUESTION 27
An old business truck with an adjusted basis of $2,000 is traded in on a new business
truck with a FMV of $21,000. The dealer agrees to a $4,000 trade-in allowance on the old
truck plus $17,000 cash. The basis of the new truck is $____________. 1 points QUESTION 28
A taxpayer inherited 25 shares of XYZ stock from his father in 2001. The stock had cost
$2,500 but was worth $3,000 at the date of the father’s death. No estate tax return was
filed. If the stock is sold for $2,800 in 2015, the taxpayer recognizes a $____________ gain/
(loss). 1 points (Extra Credit) QUESTION 29
A taxpayer received 25 shares of ABC stock as a gift. The donor’s basis in the stock was
$2,500, and the market value of the stock at the time of the gift was $3,000. No gift tax
was paid. If the stock is sold for $2,800, the taxpayer recognizes a $____________ gain/
(loss). 1 points (Extra Credit) QUESTION 30
On May 1, 2015, a taxpayer purchased 100 shares of LMX stock for $5,000. On May 20,
2015, the taxpayer sold 100 shares of LMX stock for $4,800. The shares that were sold
were purchased 10 years ago for $10,000. The taxpayer’s basis in the remaining 100
shares of LMX stock (bought on May 1, 2015) is $____________.
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