1. Fire damaged Larry's personal residence, and he was forced to buy a new home. Which of

the following is listed incorrectly as an adjustment that made to the basis of a replacement

property that resulted from an involuntary conversion?

a) Decrease the basis by any loss recognized on the conversion.

b) Decrease the basis by any money received that the taxpayer did not spend on similar

property.

c) Decrease the basis by any gain recognized on the conversion.

d) Increase the basis by any cost of acquiring the replacement property

2. Jacob purchased a rental property in 2017. The original price of the house was $158,000.

Jacob paid real estate taxes of $1,500 on behalf of the seller, which was not reimbursed by

the seller. Jacob also paid $3,000 title insurance fee, $5,000 loan assumption fee, and $800

homeowner insurance. What amount is the original basis of the rental property?

a) $167,500

b) $158,000

c) $163,300

d) $162,500

3. The Browns are both managers and file jointly with modified AGI of $166,000. Their

dependent son Gary is a full-time college student. During the tax year, they paid $10,500 in

qualifying education expenses for his second year of college. On their tax return, how will the

Browns claim the tax benefit for Gary's education expenses?

a) They are not eligible to claim a tax benefit for the education expenses.

b) They can claim an education credit, specifically the Lifetime Learning Credit.

c) They can claim the American Opportunity Credit.

d) They can claim the Tuition and Fees deduction, an adjustment to income.