1. When depreciating 5-year property, the final year of depreciation will be year

A) 3. B) 4. C) 5. D) 6.

2. Cassie owns a Rembrandt painting she acquired on June 1, 2008 as an investment. She exchanges the painting on September 5, 2015, for a Picasso painting and marketable securities to be held as an investment. On what date does the Picasso painting's holding period begin?

A) June 1, 2008

B) June 2, 2008

C) September 5, 2015

D) September 6, 2015

3. Landry exchanged land with an adjusted basis of $50,000 for another parcel of land worth $35,000 plus $10,000 of cash. Landry held the original land for investment purposes and will do the same with the new parcel. Due to the exchange, Landry will recognize

A) $10,000 gain.

B) $5,000 gain.

C) $5,000 loss.

D) $0.

4. Inventory may be valued on the tax return at the lower of cost or market unless

A) replacement cost is higher than historical cost.

B) the taxpayer determines inventory cost using the LIFO method.

C) the taxpayer determines inventory cost using the FIFO method.

D) the cash method of accounting is used by the taxpayer.

5. A business uses the same inventory method for both financial reporting and tax reporting. Because of the UNICAP requirement, ending inventory is likely to be

A) higher for tax reporting purposes than for financial reporting purposes.

B) higher for financial reporting purposes than for tax reporting purposes.

C) the same for both financial and tax reporting as UNICAP requires uniform inventory accounting methods.

D) none of the above.

6. Which of the following partnerships can elect the cash basis method of accounting?

A) a CPA firm with average revenues of $20 million

B) a chocolate manufacturer with average revenues of $3 million

C) a cleaning service partnership generating average revenues of $5.5 million whose partners are Joe, Larry and Smith Inc.

D) None of the above.