Reference no: EM132606205

Question 1. Ramona purchases an acre of real estate for $20,000,000. The real estate purchase includes the following assets and their corresponding fair market value:

Land: $12,000,000

Building: $9,000,00

Gazebo: $9,000,000

Determine the amount of Ramona's initial basis for the building

a. $6,000,000

b. $9,000,000

c. $15,000,000

d. $20,000,000

Question 2. Which one of the following assets can a code section 179 deduction be used for?

a. A $300,000 plot of land owned by Z corporation.

b. A building that serves as the headquarters of Sarah's Cake Factory.

c. A $50,000 dump truck purchases by Dave's Dirt Removal Service.

d. A $20,000 personal use automobile purchased by Sam.

Question 3. On April 2, 2015, Mona purchased a Sapphire necklace for $10,000. On June 20,2020 Mona gives the necklace to her daughter Diana, as a birthday present when the fair market value of the necklace is $20,000. Diana sells the necklace to a friend for $15,000 on July 5, 2020. What are the tax consequences for Diana?

a. Diana has a short-term gain of $5,000

b. Diana has a short-term gain of $10,000

c. Diana has a long-term gain of $5,000

d. Diana has a long-term gain of $10,000

Question 4. Susie gave her granddaughter, Laura, some ABZ Co. stock last year when its fair market value was $25,000. Susie acquired the stock in 2010 at a cost of $35,000. Laura sold the ABZ Co. stock this year for $32,000. What are the tax consequences for Laura this year?

a. No income or loss

b. Loss of (3,000)

c. Gain of 3,000

d. Gain of $10,000