Question 11 (TCO 6) Which of the following decreases adjusted basis? (Points : 2) Amortization of bo

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Question 11 (TCO 6) Which of the following decreases
adjusted basis? (Points : 2)

Amortization of
bond premium

A corporate
distribution to a shareholder treated as a return of capital in which gain is
recognized to the shareholder

Dividends
received

A and B

A, B, and C

Question 22 (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? (Points : 2)

$0

$1,500

$8,000

($1,500)

None of the
above

Question 33 (TCO 6) Eric and Faye, who are married,
jointly own a house in which they have resided for the past 17 years They sell
the house for $375,000, with realtor’s fees of $10,000 Their adjusted basis
for the house is $80,000 Because they are in their retirement years, they plan
on moving around the country and renting What is their recognized gain on the
sale of the residence if they use the § 121 exclusion (exclusion of gain on
sale of principal residence) and if they elect to forego the exclusion? (Points
: 2)

$0; $0

$35,000;
$35,000

$0; $285,000

$35,000;
$285,000

$285,000;
$225,000

Question 44 (TCO 6) Martha gives 100 shares of Green Inc
stock to her niece, Jennifer Martha’s adjusted basis for the stock is $3,000,
and the fair market value is $7,000 4 months after the gift, Jennifer is
killed in an automobile accident Martha inherits the stock, which then is
worth $9,000 What is the adjusted basis of the inherited stock to Martha?
(Points : 2)

$3,000

$7,000

$9,000

$10,000

None of the
above

Question 55 (TCO 6) The basis of personal-use property
converted to business use is _____ (Points : 2)

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 66 (TCO 6) If the taxpayer qualifies under § 1033
(nonrecognition of gain from an involuntary conversion), makes the appropriate
election, and the amount reinvested in replacement property is less than the
amount realized, then realized gain is _____ (Points : 2)

recognized to the extent of the deficiency

recognized to the extent of realized gain

recognized to the extent of the amount reinvested

permanently not subject to taxation

None of the
above

Question 77 (TCO 11) Brett owns investment land located in
Tucson, AZ He exchanges it for other investment land In which of the
following locations may the other investment land be located and enable Brett
to qualify for § 1031 like-kind exchange treatment? (Points : 2)

Mexico City,
Mexico

Toronto, Canada

Paris, France

A and B

None of the
above

Question 88 (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? (Points : 2)

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 99 (TCO 11) An office building with an adjusted
basis of $320,000 was destroyed by fire on December 30, 20X2 On January 11,
20X3, the insurance company paid the owner $450,000 The fair market value of
the building was $500,000, but under the coinsurance clause, the insurance
company is responsible for only 90% of the loss The owner reinvested $410,000
in a new office building that was smaller than the original office building
What is the recognized gain and the basis of the new building if § 1033
(nonrecognition of gain from an involuntary conversion) is elected? (Points :
2)

$0; $320,000

$0; $410,000

$40,000;
$320,000

$130,000;
$410,000

None of the
above

Question 1010 (TCO 11) Virginia, who is single, sells her
principal residence (adjusted basis of $150,000) on January 5, 20X1 for
$380,000 She has owned and occupied it as her principal residence for 20
years She incurs a realtor’s commission of $22,000 and legal fees of $5,000
On January 3, 20X1, Virginia purchases a townhouse for $300,000 and uses it as
her principal residence Because it is not near a convenience store, she sells
the townhouse on December 20, 20X1 for $330,000 She incurs a realtor’s
commission of $18,000 and legal fees of $4,000 She buys a house on December 1,
20X1 for $250,000 and uses it as her principal residence What is Virginia’s
recognized gain on the sale of each house and her adjusted basis for the house
purchased on December 1, 20X1? (Points : 2)

$0; $0;
$250,000

$0; $8,000;
$250,000

$203,000; $0;
$250,000

$0; $8,000;
$47,000

None of the
above

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