TXX5768

Question 1

Which of the following statements is false?

A.The taxpayer who sells "dealer property"may pro-rate the recognition of gain as the payments are collected on the promissory note received from the buyer at the time of sale on an installment basis.

B.The rules of IRC1237 are correctly referred to as a "statutory safe harbor."

C.If IRC1237 does not apply, the taxpayer is faced with a conflicting collection of court cases and rulings as to whether the mere fact that real propertyis subdivided for sale creates dealer status for the taxpayer.

D.ALL of the above are true.

4 points

QUESTION 2

Which of the following statements is false?

A.It is very difficult, if not impossible, for a real estate sale to qualify under IRC1237 if substantial improvements have been made to the property while the property was held by the seller.

B.If a subdivider sells more than five lots in the first taxable year of the subdivision sales, not all of the gain will be capital gain even if the transaction qualifies under IRC1237.

C.If a subdivider/seller of parcels of real estate does not qualify under IRC1237, all of the subdivided parcels are deemed to beheldprimarily for resale in the ordinary course ofthe taxpayer's business.

D.All of the above statements are true.