John borrowed $4,500 to purchase a machine. He later borrowed $2,000 using the machine as collateral. Both notes are nonrecourse. Ten years later, the machine has an adjusted basis of zero and two outstanding not balances of $2,500 and $800. John sells the machine subject to the two liabilities for $1,000. What is his realized gain or loss?

	a.	None of the above.
	b.	$4,300
	c.	$0.
	d.	$3,300.
	e.	$1,000.

10 points

QUESTION 2

Angelica purchases a house for $165,000. She converts the property to rental property when the fair market value is $140,000. After deducting depreciation (cost recovery) expense of $3,130, she sells the house for $100,000. What is her recognized gain or loss?

	a.	($65,000).
	b.	($36,870).
	c.	None of the above.
	d.	$0.
	e.	($62,870).

10 points

QUESTION 3

Olivia and Matthew exchange real estate in a like-kind exchange. Olivia's basis in the real estate, subject to a $100,000 mortgage, is $250,000 and the fair market value is $400,000. She receives real estate with a fair market value of $300,000 and Matthew assumes the mortgage. What is Olivia's recognized gain and adjusted basis for the real estate received?

	a.	None of the above.
	b.	$50,000, $400,000.
	c.	$100,000, $250,000.
	d.	$100,000, $400,000.
	e.	$0, $250,000.

10 points

QUESTION 4

On October 1, Denise exchanged an apartment building (adjusted basis of $575,000 and subject to a mortgage of $325,000) for another apartment building owned by Quinn (fair market value of $850,000 and subject to a mortgage of $325,000). The property transfers were made subject to the outstanding mortgages. What amount of gain should Denise recognize?

	a.	$0.
	b.	$50,000.
	c.	None of the above.
	d.	$225,000.
	e.	$275,000.

10 points

QUESTION 5

Maple, Inc., owns a delivery truck which initially cost $40,000. After depreciation of $25,000 had been deducted, the truck was traded-in on a new truck that cost $50,000. Maple was required to pay the car dealer $20,000 in cash. What is Maple's basis for the new truck assuming the exchange qualifies for 1031 treatment?

	a.	$0.
	b.	$15,000.
	c.	$35,000.
	d.	$50,000.
	e.	None of the above.

10 points

QUESTION 6

Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold the property on June 20, 2016 for $90,000.

What amount should Aaron use for his basis?

	a.	$90,000
	b.	$40,000
	c.	None of the above
	d.	$0
	e.	$35,000

10 points

QUESTION 7

Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold the property on June 20, 2016 for $90,000.

What amount of gain/(loss) should Aaron recognize on the sale?

	a.	None of the above
	b.	$55,000
	c.	$50,000
	d.	$40,000
	e.	$90,000

10 points

QUESTION 8

Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000.

What amount of gain/(loss) should Aaron recognize assuming he sold the property for $36,500 on 6/20/16?

	a.	None of the above.
	b.	$1,500 Short-term capital gain
	c.	$0
	d.	$3,500 Short-term capital loss
	e.	$1,500 Long-term capital gain

10 points

QUESTION 9

Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had acquired the property in 1988 and had an adjusted basis in the property of $40,000.

What amount of gain/(loss) should Aaron recognize assuming he sold the property for $30,000 on 6/20/16?

	a.	($5,000) Short-term Loss.
	b.	No Gain or Loss recognized.
	c.	None of the above
	d.	($10,000) Short-term Loss.
	e.	($10,000) Long-term Loss.

10 points

QUESTION 10

Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $90,000. Miriam acquired the property in 1966 and had an adjusted basis in the property of $40,000.

What amount of gain/(loss) should Aaron recognize assuming he sold the property for $100,000 on 6/20/16?

	a.	$10,000 Long-term capital gain.
	b.	None of the above.
	c.	$10,000 Short-term capital gain.
	d.	$60,000 Long-term capital gain.
	e.	$60,000 Short-term capital gain.