Reference no: EM132903901

Questions -

Q1) Bill sells his personal residence for $ 40,000 cash. At the time of the sale the house was incumbered by a $ 300,000 mortgage which the buyer assumed. Bill also paid a relator's commission of $ 14,000. Bill bought the residence in 2002 for $ 100,000. What is Bill's realized gain or loss?

a) $240,000 gain

b) $226,000 gain

c) $60,000 loss

d) $74,000 loss

Q2) How much of a $ 30,000 loss on residential real estate property in which a taxpayer actively participate in management may the taxpayer deduct if the only other passive activity conducted during the year was a limited partnership which generated $ 10,000 of income? The taxpayer's adjusted gross income is $ 85,000.

a) $0 passive losses are not deductible

b) $10,000 up to the passive income realized during the year

c) $25,000

d) $30,000

Q3) The investment income tax of 3.8% applies to long-term capital gains.

a) True

b) False