QUESTION 23

George purchases a piece of real estate for $100,000 cash and a nonrecourse mortgage of $900,000. George's real estate activities constitute an active business. This year the business suffers an operating loss of $190,000. As a result George can deduct:

		Zero
		$100,000
		$150,000
		$190,000
		None of the above

QUESTION 24

Sydney sells the factory building for $1 million, when it had an adjusted basis of $400,000, on the installment method. He receives $100,000 cash in the year a sale, relief from a $200,000 mortgage, and 14 notes of $50,000 each payable annually starting one year after the sale. As result he reports ______ income in the year of sale:

		$75,000
		$100,000
		$300,000
		$600,000
		None of the above

QUESTION 25

Contributions to a Roth IRA are:

		Made with before tax earnings
		Non-taxable when withdrawn at retirement
		always in the amount of $5500 per year
		all of the above
		None of the above

QUESTION 26

Harry inherited 100 acres of land on the death of his father in 2xx5. A Federal estate tax return was filed and the land was valued at $520,000 (its fair market value at the date of the death). The father had originally acquired the land in 1992 for $15,000 and prior to his death had made permanent improvements of $25,000. What is Harrys Adjusted Basis in the land?

		$15,000
		$40,000
		$450,000
		$520,000
		None of the above

QUESTION 28

Income and loss can be characterized as:

		Active
		Portforlio
		Passive
		All of the above
		None of the above

QUESTION 29

Ralph gives his daughter, Angela, stock (basis of $4,000; fair market value of 2,000). No gift tax results. If Angela subsequently sells the stock for $9,000, her Recognized Gain is:

		zero
		$7,000
		$5,000
		$10,000
		none of the above

QUESTION 31

George sells his car to Agnes for $8,000 cash and Agnes assuming Georges car loan of $9,000. Georges adjusted basis in the car at the time of sale was $5000. Georges Gain Realized on the sale is:

		$8,000
		$12,000
		$17,000
		$3,000
		None of the above

QUESTION 32

Mary sells her personal use automobile for $25,000. She purchased the car two years ago for $32,000. What is Marys allowable loss deduction?

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

QUESTION 33

Sam purchases an automobile for $20,000 in 2018 when a junior in college. Upon graduation, when the car was worth $15,000, Sam begins to use it exclusively as a vehicle driving for Uber. Over the next two years Sam properly takes $3000 of depreciation on the car, and then sells the car for $10,000. As a result Sam will report ___________ on the sale of the car.

		A deductible loss of $2,000.
		A deductible loss of $7,000
		A deductible loss of $5,000
		Zero Gain or Loss
		None of the above

QUESTION 34

Acme, an S corporation since inception, makes a distribution to its sole shareholder, Sam, of $75,000 when Sam's adjusted basis in his stock of Acme is $100,000. As a result Sam has:

		Zero gross income
		$75,000 of gross income taxable at ordinary rates
		A taxable dividend at capital gains rates of $75,000
		A $25,000 loss
		None of the above

QUESTION 39

George owns all the stock of Acme, Inc. (adjusted basis of $250,000). If he receives a distribution from Acme of $80,000 a when corporate accumulated earnings and profits are $40,000, and current earnings and profits are $15,000, He has

		zero dividend
		$55,000 Dividend
		$85,000 Dividend
		zero Dividend
		None of the above