1.( T or F ) N&B Inc. holds land with a tax basis of $100,000. In selling the land, the purchaser paid $80,000 cash, gave N&B Inc. a car worth $50,000 and assumed N&B Inc.'s $255,000 mortgage on the land. N&B's gain on the sale was $285,000.

2. ( T or F ) Mr. Jason realized a $500,000 gain on the sale of the building portion of a residential apartment complex that he had placed in service in 1993. Accumulated depreciation on the sold building was $311,800. The $188,200 gain is characterized as Section 1231 gain and is taxed at 20%.

3. ( T or F ) One of the requirements to treat a transaction as a nontaxable Section 1031 exchange is that the property must be held for investment, for productive use in a trade or business or as dealer property held for sale to customers in the ordinary course of a trade or business.

4.A non-U.S. corporation investor held a real estate asset (a parcel of land) that that was purchased for $100,000,000 for 10 years and will sell it for $130,000,000.The investor gain on the sale of the asset is considered to in a business that is effectively connected to a U.S. trade or business (ECI).

a.Compute the tax on the sale assuming that the investor held the asset directly (consider both ECI and branch profits tax)

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b.Compute the tax to the investor if held through US corporation (consider both entity level tax and FDAP tax on the distributions) with no treaty rates and a plan of liquidation in the year of sale

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5. Acclaim LLC owns a residential apartment complex. During 2020, Acclaim constructed a new roof on the building. The roofing materials cost of $200,000 and labor cost $300,000. In addition, Acclaim hired an outside consultant to consider what type of roofing materials should be used on the project. Since the roof was energy efficient, Acclaim received a rebate against the cost of materials of $30,000 from a local utility. In addition, Acclaim paid $18,000 in sales tax on roofing materials and a $500 delivery charge to get the materials on site. What is Acclaim's tax basis in the roof?

6. Name three reasons why a REIT might be used for real estate investment:

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2 ________________________________

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