4. A taxpayer bought a rental real estate property in year 1 for $200,000. For years 1 and 2 the following was reported:

Year		Property year income (loss)		AGI
1		($20,000	)	$	90,000
2		(35,000	)		175,000

In year 3, the property was sold for $275,000. The taxpayer materially participated in the rental activity in all three years but is not considered a real estate professional for tax purposes. Assume there is no income or loss in year 3 from the properties. What amount of gain is reported, in year 3 on the taxpayer's return, as a result of the sale?

a. $20,000

b. $30,000

c. $40,000

d. $75,000

5. An LLC exchanged an office building with a fair market value of $550,000 and an adjusted basis of $220,000 for a shopping center with a fair market value of $600,000. If the LLC paid an additional $50,000 to complete the exchange, what amount of gain, if any, would the LLC realize?

a. $0

b. $50,000

c. $330,000

d. $380,000

6. Which of the following statements regarding the deduction for self-employment taxes is correct?

a. 50% of self-employment taxes are deductible from self-employed income.

b. 50% of self-employment taxes are deductible on Schedule A.

c. 50% of self-employment taxes are deductible from AGI.

d. 50% of self-employment taxes are deductible to arrive at AGI.