Reference no: EM132248504

Questions -

Q1. "Exchanged basis" is a term commonly applied in situations whereby a taxpayer has acquired property through a "like-kind' exchange. (True/False).

Q2. Under current law, when an investor dies (in a year other than 2010) the beneficiary of his property

a. has a basis measured by the property's fair market value on the date of death

b. must waive any alternative valuation date for estate tax purposes

c. cannot realize a gain in terms of the property's value

d. pays only capital gain, not ordinary income, taxes on the appreciation of the property

Q3. Jim purchased land for $100,000. At the time of his death, the land had a fair market value of $150,000. The beneficiary of the land sells the land for $160,000. How much gain does the beneficiary have to recognize?

a. 0

b. $10,000

c. $50,000

d. $60,000

Q4. Jake purchases stock for $5,000. After it appreciates in value to $10,000, he gives it to Joan. Joan turns around and sells the stock for $12,000. How much gain does Joan have to recognize?

e. $0

f. $2,000

g. $5,000

h. $7,000

Q5. Janet purchases land in a nearby town in July, 2018 for $15,000 and resells the same property for $27,400 in September, 2018. Upon the sale of this land

a. a long-term capital gain is realized, but basis must include, as part of its calculation, the amount paid by the seller of the property to Irene.

b. a short-term capital gain of $12,400 is realized.

c. the tax effect of the sale is such that ordinary income tax will be paid on $27,400 minus the original cost of the property plus any tax paid on the original down payment.

d. no gain is realized until after twelve months have passed; however, ordinary income tax will have to be paid on the sum of $27,400 minus $15,000.