Final Exam >
final exam score:
final exam status:
95%PASSED
Final Exam > Question 1
Which of the following transactions do not qualify as a Code Sec. 1035 exchange?
XXX Annuity contract for a life insurance contract
Life insurance contract for another life insurance contract
Life insurance contract for an annuity contract
Life insurance contract for an endowment contract
Final Exam > Question 2
All of the following statements with regard to like-kind exchanges are correct except:
An exchange of an apartment house for a factory can qualify as a like-kind exchange.
Foreign realty can never be treated as like-kind property.
XXX For transfers to qualify as like-kind exchanges, the exchange must be completed within 45 days.
In an otherwise qualifying like-kind exchange, gain is generally recognized to the extent of “boot” received by the taxpayer.
1040 Preparation and Planning 5: Acquisition and Disposition of Property (2016 Edition) 83
Final Exam > Question 3
Which of the following is a requirement for the $250,000/$500,000 exclusion on sale of residence (assume the home was not acquired in a tax-free exchange)?
The taxpayer must be age 55 or older.
The taxpayer must not have previously claimed any home sale exclusion.
The taxpayer’s modified adjusted gross income must be below a set level.
XXX The taxpayer must have owned and occupied the residence as a principal residence for at least two of the five years before the sale (unless the taxpayer is eligible to suspend the five-year period).
Final Exam > Question 4
John Anderson, who is single, bought his home on May 1, 2014. On May 1, 2015, he sold his home because his employer relocated him across the country. Assume his gain is $20,000. He may exclude:
$0
$10,000
XXX $20,000
None of the above
Final Exam > Question 5
A married individual has owned a home in her name since 2009. Both she and her husband have lived in the home since the day she bought it. She bought the home for $150,000 and sold it in 2015 for a profit of $600,000. What is her maximum home sale exclusion?
$150,000
$250,000
XXX $500,000
$600,000
Final Exam > Question 6
In 2015, a surviving spouse sells the residence that she and her deceased husband owned and lived in since 1994. Her husband died in 2014. Gain on the sale was $300,000. How much of the gain can she exclude?
$0
$250,000
XXX $300,000
$500,000
Final Exam > Question 7
The basis of a primary residence can be increased by each of the following except:
XXX Painting the exterior
Waterproofing the basement
Installing new countertops in the kitchen
Installing solar panels
Final Exam > Question 8
A home owner, who is single, used one bedroom in his residence as a home office for the past five years. Assume he owned the home for this period as well. Which of the following statements is correct?
He can exclude all of his gain on the sale of the home up to $250,000 and need not report any depreciation on the home office.
XXX He can exclude his gain on the sale of the home up to $250,000 but must report any depreciation on the home office, which is taxed at 25%.
He must apportion the gain between the residence and the home office, reporting gain with respect to the home office.
He cannot exclude any gain because of the business use of the home office.
Final Exam > Question 9
Henry Davidson started using a room in his home as an office in 2010, using 10% of the space in his home for business. He has claimed a total of $2,000 depreciation for the portion of his residence used as a home office. If he sells his home in 2015 at a gain of $80,000, which amount is taxed at 25%?
$0
XXX $2,000
$8,000
$78,000
Final Exam > Question 10
A business’s building in New Jersey is destroyed by flooding, and the owner receives an insurance recovery. Assume that the business has a gain from this involuntary conversion and that the area has not been designated eligible for federal disaster relief. What is the replacement period for postponing gain?
One year
XXX Two years
Three years
Five years
Final Exam > Question 11
The basis of property received for services performed is equal to the:
Cost of the services provided
XXX Fair market value of the property
Cost of the property
Lower-of-cost-or-market price of the property
Final Exam > Question 12
Which of the following will affect the basis of property?
Depreciation
Boot paid for property acquired in an exchange
Unrecognized gains on involuntary conversions
XXX All of the above
Final Exam > Question 13
Harriet Nichols purchased a painting 40 years ago for $50 at a tag sale. She died in 2015, leaving the painting to her niece. The value of the painting on the date of her death was $5,000, and this value was reported on Harriet’s state estate tax return (assume her total estate was $500,000). Eight months later, the artist died, increasing the value of his works. The niece sold the painting at auction 10 months after Harriet’s death for $12,000. For purposes of determining gain or loss, the niece’s basis in the painting is:
$40
$50
XXX $5,000
$12,000
Final Exam > Question 14
Which of the following is true as to net long-term capital gain in 2015?
For taxpayers in the 10% or 15% bracket, the rate on net long-term capital gains is 5% for sales.
The top capital gains rate is 15%.
XXX For taxpayers in the 10% or 15% bracket, there is no tax on net long-term capital gains for sales.
Corporations are eligible for the special rates.
Final Exam > Question 15
Which of the following is true as to long-term capital gain?
XXX Taxpayers in the 39.6% tax bracket pay 20% on such gain.
An installment sale was made in 2012. Gain on the payment received in 2015 can be taxed at no more than 15%, regardless of the seller’s tax bracket.
The 15% rate applies to all sales or exchanges made in 2015, even sales of collectibles and unrecaptured depreciation.
The 15% rate applies as well to short-term capital gains of all taxpayers.
Final Exam > Question 16
Daniel Baxter purchased a building for $150,000, has a basis of $40,000 after several years of straight-line depreciation (totaling $110,000), and sells the building in August 2015 for $175,000. Assume that his tax bracket is 33%. Gain is taxed in the following manner:
$135,000 at 15%
XXX $110,000 at 25% and $25,000 at 15%
$135,000 at 25%
$135,000 at 33%
Final Exam > Question 17
In 2015, a taxpayer sells Section 1202 stock that had been issued nine years ago. What is the exclusion percentage?
28%
XXX 50%
75%
100%
Final Exam > Question 18
All of the following statements are correct except:
If the total of a taxpayer’s capital gains is more than the total of capital losses, the excess is taxable.
The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately.
XXX When a taxpayer carries over any capital loss, its character will be long-term.
The yearly limit on the amount of the capital loss a taxpayer can deduct in excess of capital gains is $3,000 ($1,500 if married filing separately).
Final Exam > Question 19
Vince Maxwell, who is in the 28% tax bracket, sold 10 shares of X stock for a gain on June 30, 2015. He had purchased the stock on April 12, 2014. The gain is taxed at:
XXX 15%
20%
25%
28%
Final Exam > Question 20
Capital losses in excess of capital gains (after offsetting up to $3,000 of ordinary income) can be carried forward:
One year
Two years
Five years
XXX Indefinitely