Multiple Choice Questions
1. Kellye purchased her home in 2011 for $140,000. After living in it for five years, she sold it in 2016 for $170,000, its market value. What is the tax treatment of the sale of Kellye's home?
a. A $30,000 gain is recognized, but not reported.
b. A $30,000 gain is recognized and reported.
c. A $30,000 gain is carried forward.
d. The transaction is not reported.
2. Ike, a single taxpayer, is reassigned for his job and must move to a new state. While searching for a place to live, he encounters a person who is selling her home in order to move to Ike's current city. The two agree to trade their properties to each other without any further consideration. Ike's house has a fair market value of $200,000 and basis of $130,000. He has lived in the house for one year. The house he is acquiring in the trade has a fair market value of $300,000. What gain will Ike recognize for Federal tax purposes?
a. $50,000
b. $100,000
c. $0
d. $300,000
3. Mikhail owns real estate with a basis of $400,000 and a fair market value of $650,000. He exchanges it for other real estate with a fair market value of $480,000. In addition, Mikhail is relieved of a mortgage on the old property of $200,000, assumes a mortgage on the new property of $100,000, and receives $70,000 in cash. Under Code Section 1031, what is Mikhail's recognized gain on the exchange?
a. $170,000
b. $270,000
c. $70,000
d. $350,000
4. Stephen purchased a video game console five years ago for $500. In order to raise money for the "latest and greatest" console, Stephen sold his console for $100. Because of advances in technology, Stephen can purchase the new console for $400. What is the tax treatment of Stephen's sale of his console?
a. Stephen recognizes a $400 loss.
b. Stephen does not report the sale.
c. Stephen recognizes a $300 loss.
d. Stephen recognizes a $100 gain.
5. Uncle Ubb gave his nephew, Leroy Lamprey, a gift of stock worth $10,000. Uncle Ubb's basis in the stock was $15,000. Leroy sold the stock to an unrelated party for $11,000. What amount of gain or loss should Leroy report as a result of this sale?
a. $0
b. $4,000 loss
c. $200 gain
d. $1,000 gain
6. On June 1, 2016, Gary gave Gertrude a gift of stock worth $10,000, paying no gift tax on the transaction. Gary had purchased the stock for $7,500 in 2012. On October 1, 2016, Gertrude sold the stock to an unrelated party for $11,000. What is the amount and character of Gertrude's gain upon the sale?
a. $1,000 short-term capital gain
b. $3,500 long-term capital gain
c. $1,000 long-term capital gain
d. $3,500 short-term capital gain
7. Shomit purchases 100 shares of stock in Classy Corporation for $500 in year 1. On December 20 of year 2, he purchases an additional 100 shares in the company for $400. On December 27 of year 2, Shomit sells the 100 shares acquired in year 1 for $410. What is Shomit's resulting basis in the shares acquired on December 20 of year 2?
a. $400
b. $500
c. $490
d. $410
8. Sengupta died on February 1, 2015, and bequeathed two different assets to a beneficiary, Roberts. Asset One was distributed to Roberts on April 24, 2015; Asset Two was distributed to Roberts on October 25, 2015. The executor of Sengupta's estate makes a qualified alternate valuation date election. The basis of each bequeathed asset will thus be the fair market value on which date?

Transcribed Image Text:

Asset One August 1, 2015 April 24, 2015 April 24, 2015 August 1, 2015 Asset Two a. b. C. d. August 1,2015 August 1,2015 October 25, 2015 October 25, 2015