1. Capital improvements and additions to property are added to the original basis to arrive at adjusted basis whereas depreciation is subtracted from the original basis to arrive at adjusted basis.

   True

   False

1.3334 points

QUESTION 29

1. Sidney sells 5 installment notes with a total face value of 100,000 for 90,000. The profit percentage on the installment sale that produced the notes was 60%. As a result Sidney reports a gain of $54,000 on the sale of the notes.

   True

   False

1.3334 points

QUESTION 30

1. Mary sells her personal use automobile for $29,000. She purchased the car two years ago for $22,000 and has made no capital improvements and suffered no losses on the car. What is Marys reportable income from the sale?

   		$12,000
   		$7,000
   		$3,000
   		zero
   		None of the above