1. Jack purchased a house in January 2014 for $119,000. The house was not his primary

residence. During the time Jack owned the house, he deducted $13,000 for depreciation. The

county installed water and sewer connections (valued at $7,000). Jack had to rewire the

house, which cost $1,500. He has lived in the house since January of 2017. What is Jack's

adjusted basis in the house?

a) $114,500

b) $106,000

c) $127,500

d) $119,000

2. Using the same information in the previous question, calculate Jack's adjusted basis in the

home as he prepares to sell it. Jack has the following expenses in the final year that he owns

the house:

Replace the roof $5,000 Outside security lights $ 200

Replace broken window pane $ 50 Landscaping $ 345

Patch the kitchen wall $ 125 Replace gravel in the driveway $ 220

a) $120,265

b) $120,045

c) $119,500

d) $133,045

3. Sophia is a self-employed accountant. John is a house painter. Both Sophia and John are

members of a barter club. They agreed to exchange their services for payment. Sophia did

the bookkeeping for John and John painted Sophia's house. Sophia usually charges $500 for

the bookkeeping and John usually charges $600 for painting the house. During the year,

Sophia had a cash income of $28,000, credit card income of $35,500. What amount are

Sophia's gross receipts?

a) $64,100

b) $63,500

c) $64,000

d) $36,100