16. ____ When taxpayers sell property in an installment sale and realize gain, they generally recognize gain:

a. In the first year in which an installment payment is received.

b. Over the tax years in which they collect the proceeds from the sale.

c. At the time of the sale.

d. None of the above.

17. ____Which of the following statements is not true about installment reporting:

a. At least one payment is to be received after the close of the year of the sale of the property is made.

b. The installment method allows gain to be spread over more than one year.

c. The gross profit rate is used to determine the portion of the payment received that is reported as income.

d. An advantage of the installment method is that the dollar amount of income recognized from each payment never varies from year to year.

18. ____Robert exchanged an apartment building with an adjusted basis of $100,000 and a fair market value of $200,000 for rental house valued at $180,000 plus cash of $20,000. What is Roberts recognized gain and basis of the rental house?

a. $0 and $100,000

b. $0 and $180,000

c. $20,000 and $100,000

d. $20,000 and $180,000

e. None of the above 1

9. ____ If a client contributes ordinary income property to a qualified public charity, the deduction would be subject to which of the following limits?

a. 20 percent of the clients AGI

b. 30 percent of the clients AGI

c. 40 percent of the clients AGI

d. 50 percent of the clients AGI

20. ____A piece of business equipment valued at $800 which cost $1,000 and had been depreciated down to $600 was donated to a charitable organization. What is the correct income tax treatment for the contribution?

a. Contribution of $600 (no income recognized)

b. Contribution of $1000 (income of $200 recognized)

c. Contribution of $800 (income of $200 recognized)

d. Contribution of 4800 (no income recognized)

e. None of the above

21. ____A less than 1% interest in stock in XYZ Co. which is publicly traded was contributed to a private charity at a time when the basis was $1,000 and fair market value was $1,500. Your client held this stock for 13 months before making the donation. What is the correct income tax treatment for the contribution?

a. Contribution of $1,000 (no gain recognized)

b. Contribution of $1,500 (no gain recognized)

c. Contribution of $1,500 ($500 gain recognized)

d. None of the above

22. ____To be a non-taxable, like-kind exchange, all of the following conditions must be met except:

a. Property must be tangible property

b. Exchange must meet the completed transaction requirements (180-day requirement)

c. Property must be (un)encumbered by mortgages or other liabilities

d. Property must be business or investment property.

23. ____Taxpayers office building, adjusted basis of $200,000 was destroyed by fire. She received $500,000 from her insurance claim and reinvested $450,000 in a new office building. She wants to elect to postpone as much as gain as possible. What was her recognized gain/loss and the basis in the new office building?

a. $300,000 and $450,000

b. $300,000 and $200,000

c. $50,000 and $200,000

d. $50,000 and $450,000

e. None of the above

24. ____Which of the following is not an example of a nontaxable like-kind exchange?

a. Improved real estate for unimproved real estate

b. Printer for a computer

c. Common stock of one company exchanged for common stock of a different company

d. Apartment building for a store building e. Real estate for a ranch.

25. ____Your clients office building with an adjusted basis of $480,000 is condemned by the state of CT. CT awards your client $600,000 which he uses to acquire a replacement office building for $520,000. Assuming your client makes the election, what is his recognized gain?

a. $80,000

b. $120,000

c. $40,000 d. $0

26. ____Your clients factory was totally destroyed by fire. His adjusted basis at the time of the fire was $580,000. Though your client estimated the fair market value of the factory to be $660,000 before the fire, the insurance company only paid your client $550,000 on the claim. Your client replaced the factory at a cost of $600,000. What is your clients recognized gain or loss?

a. $30,000 loss

b. $20,000 gain

c. $50,000 loss

d. $80,000 loss

e. $0 gain or loss

27. ____Non-business bad debts are deductible:

a. As short-term capital losses

b. In full against business gross income

c. Only when they become wholly or partially worthless

d. a and c are both correct.