QUESTION 68

1. Bluebird Corporation has accumulated E&P of $10,000. For 2019, it has current E &P of $12,000. On July 1, 2020, Bluebird distributes $135,000 to its sole shareholder, Cameron. Cameron has a basis of $160,000 in his stock in Bluebird Corporation before the distribution. As a result of the distribution,

   		Cameron has dividend income of $135,000.
   		Cameron has dividend income of $22,000 and reduces his stock basis to zero.
   		Cameron has dividend income of $20,000 and reduces his stock basis to $47,000.
   		Cameron has no dividend income, reduces his stock basis to zero, and has a capital gain of $135,000.
   		None of the above.

1 points

QUESTION 69

1. Oscar sells his personal use car to Adam, for 10,000 in the year of sale, relief from a 20,000 loan on the car and and 6 notes of 5,000 each payable annually starting one year after sale. Adams basis in the car at the time of sale was 15,000. When adam receives the first 10,000 payment in the year of sale, he will report:

   		Zero Gain or Loss
   		10,000 Gain
   		15,000 Gain
   		30,000 Gain
   		none of the above

1 points

QUESTION 70

1. Adam Exchanges a shoe factory, Fair Market Value 280,000. and Adjusted Basis of 100,000, which is subject ot a Mortgage of 70, 000 for Brads shoe factory which has a Fair Market Value of 500,000 and is subject to a mortgage of 310,000 and 20,000 in cash. Each party assumes the mortgage on the property they are receiving in the exchange; Adams Adjusted Basis in the shoe factory received from Brad is:

   		100,000
   		20,000
   		500,000
   		340,000.
   		None of the above

1 points

QUESTION 71

1. Oscar sells his personal use car to Adam, receiving in return $3800.00 in cash. The buyer assumes Oscars mortgage on the car of $1500.00. Oscars adusted basis in the car was $2500.00 as the time of the sale. Oscars Amount Realized on the sale is:

   		3800.00
   		1500.00
   		5,300.00
   		2800.00
   		None of the above

1 points

QUESTION 72

1. In the case of a sale reported under the installment method, each dollar collected is in part a recovery of cost and in part a taxable gain.

   True

   False

1 points

QUESTION 73

1. Green Company acquires a new machine for use in its manufacturing operations, places it in service, but then discovers that it is not suitable for Greens business. Consequently, Green sells the machine 10 months after it was acquired. There is a $10,000 loss on the disposition. When the machine was disposed of, it was:

   		A capital asset.
   		An ordinary asset.
   		An inventory asset.
   		A 167 1231 asset.
   		None of the above.

1 points

QUESTION 74

1. Alicia buys a beach house for $300,000 which she uses as her personal vacation home. She builds an additional room on the house for $40,000. She sells the property for $400,000 and pays $18,000 in commissions and $4,000 in legal fees in connection with the sale. What is the recognized gain or loss on the sale of the house?

   		$38,000.
   		$60,000.
   		$78,000.
   		$100,000.
   		None of the above.

1 points

QUESTION 75

1. The earned income credit, a form of a negative income tax, is a refundable credit.

   True

   False