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final exam score:
final exam status:
100%
Question 1
Correct
Travis Brooks purchased a home in 2012 for $300,000. The value of the land included in the purchase price was $70,000. Brooks immediately began using 5% of the home for business purposes. What will be the depreciable basis for his home?
$0
(You Answered) (Correct Answer) $11,500
$230,000
$300,000
Question 2
Correct
The Jones family sells the home they have lived in for the past 10 years for a $400,000 agreed-upon sales price. They pay their agent a 7% commission of $28,000, and agree with the buyer to pay the closing costs of $8,000. What would be the amount realized from the sale of their home?
$400,000
$372,000
$392,000
(You Answered) (Correct Answer) $364,000
Question 3
Correct
A married couple who owns a home and files a joint return decides to sell the home and wants to take advantage of any exclusion of gain they are entitled to. The couple lived in the home as their principal residence for three of the past five years, but lived in their beach house the other two years. What is the maximum amount of realized gain the couple may exclude upon the sale of the home?
$0
$250,000
(You Answered) (Correct Answer) $500,000
Cannot be determined from the information provided
Question 4
Correct
Michael Cooper sold his main home in 2012 at a $12,000 gain. Michael meets the use and ownership test to exclude the gain from his income. However, Michael used part of his home for business from 2011–2012 and deducted depreciation expense totaling $450. What is the maximum amount of gain that Michael can exclude on the sale of his home?
$0
$450
(You Answered) (Correct Answer) $11,550
$12,000
Question 5
Correct
Tony Moore purchased a townhome in 2007 for $150,000. He used 20% of his home for business. Tony took depreciation deductions related for the business use of his home totaling $3,000 on his income tax returns from 2007–2012. In March 2012, Tony sold his home for $130,000 (net of selling expenses). What amount of gain or loss will Tony report on his tax return for the sale of the business portion of his home?
$1,500 loss
(You Answered) (Correct Answer) $1,000 loss
$0
$3,000 gain
Question 6
Correct
A taxpayer’s marginal tax rate (tax rate on the last dollar of taxable income) is 31%. During the year, the taxpayer sells his main home, where he used 20% of the home for business. As a result of the sale, the taxpayer recognizes $3,500 of unrecaptured Sec. 1250 gain. At what tax rate will this gain be taxed?
0%
15%
(You Answered) (Correct Answer) 25%
31%
Question 7
Correct
Which of the following is not an acceptable reason for failing the ownership and use requirements and thereby qualifying for a reduced maximum exclusion on the sale of the taxpayer’s principal residence?
Wife’s chronic health condition requires the taxpayer to sell a two-story home and purchase a ranch in the same neighborhood.
Taxpayer is transferred by his employer to another state.
(You Answered) (Correct Answer) Taxpayer inherits a large sum of money, allowing him to purchase a larger home.
A violent storm causes significant damage to the taxpayer’s residence. Instead of spending six to eight months rebuilding the home, the taxpayer chooses to use the insurance proceeds to purchase another home in the same city.
Question 8
Correct
Jessie Panquin, a self-employed artist, converted a separate structure located on his property into an art studio. The structure is 12 feet from his personal residence. Jessie uses the studio solely for business purposes. Jessie deducted $1,200 of depreciation on the art studio on his 2010 tax return and $1,200 on his 2011 tax return. On January 3, 2012, Jessie sold his home and the separate structure for a $51,000 gain. He determined, based on the allocation percentage used to depreciate the studio, that $3,000 of the gain is allocated to the studio. How much of the taxable gain is unrecaptured Code Sec. 1250 gain?
$0
$600
$3,000
(You Answered) (Correct Answer) $2,400
Question 9
Correct
Which of the following statements is true concerning the sale of a home at a loss?
There is a tax law provision allowing taxpayers to claim a tax deduction when they sell their non-business principal residence at a loss.
(You Answered) (Correct Answer) A realized loss may be able to be deducted if a portion of the home was used and entitled to be used for business purposes.
Business losses from the sale of a personal residence are treated as Code Sec. 1231 losses if the property was held for one year or less at the time of the sale.
Business losses from the sale of a personal residence are treated as ordinary losses if the property was held long-term.
Question 10
Correct
When a taxpayer sells a principal residence at a gain, what must he or she report on Form 1040?
(You Answered) (Correct Answer) Any realized gain that cannot be totally excluded from gross income
The sales price, basis, and any gain or loss whether excludable or not
The realized gain that the taxpayer is excluding from gross income
None of the above