4)Your friend JJ purchased a property for development. The property had a cost basis of $5,000,000, JJ paid $1,250,000 cash, the remaining $3,750,000 financed via non recourse mortgage. Unfortunately, the development was a flop and JJ couldn't meet the mortgage payment. At the time of default, the mortgage had a balance of $6,500,000 due to refinancing. The accumulated depreciation was S650,000 fair market value at the time of foreclosure was $6,000,000. What is the gain or loss on foreclosure? A. Gain of $2,150,000 B. Gain of $5,950,000 C. Loss of $650,000 D. None of the other responses E. Gain of $5,350,000 3 points QUESTION 5 Which of the following statements is correct? Mike, who is a handy man, received concert tickets for doing repairs. The tickets had a FMV of $250 and a face value of $125. Mike included $125 in gross income. Jenny won a car on the price is Right. The retail price of the car is $35,000. Jenny included $35,000 in her gross income. John is 12 years old and the son of Tom and Ida. Unfortunately, John was very sick and spent over C.270 days in a hospital. Tom and Ida cannot claim John because more than half of the year, John was In a hospital and not at home. D. Paul earned $500 in municipal hond interest. He excluded this income from taxable income 1) Which of the following items do not affect the property's basis? A. Improvements B. None of the other responses. C. Depreciation D. Inflation E. Acquisition Costs 2) Passive losses can only be offset by: C A. Can never be deducted B. Can be offset against Ordinary Income C.Can be offset against Passive income D. Can be offset against portfolio income E. Can be offset against Capital Gains 3) Bull, LLC, a calendar year taxpayer, purchased a residential building and land in Buffalo, NY for a total cost of $6,000,000 and allocated 20% of the cost to the land. Bull placed the building in service on January 3rd of its initial year of operations. Compute the depreciation expense for Bull with respect to the realty for the initial year of operations / the year the realty was purchased A $167.272 B. $123,076 C. $218,181 D. None of the other responses E. $174,545 3 points QUESTION 9 Paul, who is a doctor, is advised to invest in rental property. He becomes a 25% owner of US Realty LP. In year 1 Paul makes a capital contribution of $30,000. The partnership had net income of $500 in year 1(Paul share's of the gain is $125). In year 2, Paul makes an additional capital contribution of $10,000. The partnership has a net loss $5,000 in year 2. (Paul's share is $1,250). In year 3, partnership distributes $20,000 to Paul. Also, in year 3, the partnership incurs losses of $20,000 (Paul's share is $5,000). What is Paul's At Risk/Tax Basis at the start of year 4? A. $20,125 B. $40,125 C$15,125 D. $40,000 D E $10,500 3 points QUESTION 10 Which of the following income is considered passive for purposes of the passive activity rules? A Wages from a part-time job B. Interest income from a bond C. Capital Gain from the sale of investment asset D. Income from a rental property E. B, C and Donly
