Indicate whether the statement is true or false. If false, you must correct the statement AND provide an explanation as to any applicable rules. FAILURE TO COMPLY WITH THESE INSTRUCTIONS WILL RESULT IN NO POINTS AWARDED. Lili wants to give her son $5,000 for Christmas. As an alternative, he suggests that Lili pay the property taxes on his residence. If Lili pays the property taxes, she can deduct them. A U.S. citizen who works in France from February 1, 2015 until January 31, 2016 is not eligible for the foreign earned income exclusion in 2015 but is eligible for it in 2016. Sam sold his personal residence in a "short sale, " for a price of $225,000. At the time of the sale, Sam owed $250,000 on his home. The lender agreed to accept $225,000 to satisfy the mortgage, and forgave the outstanding balance of $25,000 as he was financially unable to pay. Sam has to include $25,000 in income as a result of this discharge of indebtedness. The cost recovery basis for property converted from personal use to business use is the fair market value of the property at the time of the conversion. Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service. For personality property placed in service in 2016, the 179 maximum deduction is limited to $200,000. No other limits apply. Once the more-than-50% business usage test is passed for listed property, it does not matter if the business usage for the property drops to 50% or less during the recovery period. No adjustments would need to be made to prior depreciation methods or calculations. Molanda sells a parcel of land for $25,000 in cash and the buyer assumes Molanda's mortgage of $20,000 on the land. Molanda's amount realized is $45,000. The basis of property received by gift is zero. The basis of inherited property is zero