62) To postpone any gain on an involuntary conversion, the taxpayer must purchase qualifying replacement property that is "similar or related in service or use" to the property involuntarily converted. (True or False)

a) True

b) False

63) The time period to replace property destroyed in an involuntary conversion is two years from the event. (True or False)

a) True

b) False

64) The "similar or related in service or use" requirement for property involuntarily converted is less restrictive than the like-kind exchange requirements. (True or False)

a) True

b) False

65) The replacement period for an involuntary conversion always ends two years after the close of the first taxable year in which any part of the gain is realized. (True or False)

a) True

b) False

66) An involuntary conversion results in money received. If the replacement property is purchased within the two-year period, the basis of the new property is its cost less the deferred gain. (True or False)

a) True

b) False

67) On an involuntary conversion in which the taxpayer does not buy replacement property within the replacement period, the gain on the involuntary conversion and any tax due must be reported:

A) In the year the replacement period expires.

B) In the year the involuntary conversion occurred.

C) Never, because the tax year of the conversion would be closed.

D) As soon as the taxpayer knows replacement property will not be purchased.

68) If a taxpayer excludes the gain on the sale of his personal residence and, within two years, sells a second residence, he or she can exclude (up to $250,000 for a single taxpayer):

A) The entire gain on the second sale if the sale is due to health, employment reasons or unforeseen circumstances.

B) The entire gain for any reason.

C) A ratio of the days owned divided by 730 days and only if the sale is due to health, employment reasons or unforeseen circumstances.

D) A ratio of the days owned divided by 730 days for any reason.

69 . Darren and Nikki own a cabin in Mammoth, California.During the year, they rented it for 45 days for $9,000 and used it for 12 days for personal use.The house remained vacant for the remainder of the year.The expenses for the house included $8,000 in mortgage interest, $2,000 in property taxes, $1,200 in utilities, $750 in maintenance, and $4,000 in depreciation.What is their net income or loss from their cabin rental (without considering the passive loss limitation)? Use the IRS method for allocation of expenses.

a.$0.

b.$3,592 net loss.

c.$6,950 net loss.

d.$9,000 net income.

70.Sean and Jenny own a home in Boulder City, Nevada, near Lake Mead.During the year, they rented the house for 40 days for $3,000 and used it for personal use for 18 days.The house remained vacant for the remainder of the year.The expenses for the house included $14,000 in mortgage interest, $3,500 in property taxes, $1,100 in utilities, $1,300 in maintenance, and $10,900 in depreciation.What is the deductible net loss for the rental of their home (without considering the passive loss limitation)?Use the Tax Court method for allocation of expenses.

a.$0.

b.$388.

c.$8,090.

d.$27,800.

71.What is the maximum amount of passive losses from a rental activity that a taxpayer can deduct against active and portfolio income per year (assuming no passive loss limitation due to AGI or personal use of the property)?

a.$0.

b.$15,000.

c.$25,000.

d.$50,000.

72.Billy Ray owns several parcels of rental real estate, and he actively participates in managing the properties. His total loss from these activities in 2018 is $30,000 and his AGI for 2018 is $110,000. For how many years may the disallowed loss be carried forward?

a.The disallowed loss may not be carried forward.

b.The disallowed loss may be carried forward for 15 years.

c.The disallowed loss may be carried forward for 15 years, but only after it has been carried back for 3 years.

d.The disallowed loss may be carried forward indefinitely.

73.The percentage of passive losses that may offset nonpassive income for 2018 is:

a.0%

b.10%

c.The percentage varies depending on the level of AGI.

d.100%

74.Which of the following statements is incorrect?

a.A vacation home becomes a personal residence when its owner uses it more than the greater of 14 days or 10 percent of the number of rental days.

b.If a dwelling is classified as a personal residence, rental losses are not deductible.

c.If an individual rents out a vacation home for more than 14 days and does not use it excessively for personal purposes, losses are allowed to be deducted from AGI.

d.If an individual actively participates in the rental real estate activity, up to $25,000 of losses can be used to offset nonpassive income.