{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

4422_Exam_2_Practice_Problem Set

4422_Exam_2_Practice_Problem Set - HA 4422 Exam 2 Practice...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
HA 4422 Exam 2 Practice Questions Chapter 9 7. Brad, an engineering consultant, was given $2,000 of stock for services rendered. His basis in the stock he received for the services is $2,000 since he will have to recognize income equal to the fair market value of the stock. 9. Taxpayers who construct property for their own use must capitalize both the direct and indirect construction costs. 13. The split basis rules for business property prevents the deduction of the disallowed personal loss through depreciation or a loss from the sale of business property. MULTIPLE CHOICE 11. David pays $35,000 cash and issues a mortgage note for $95,000 to purchase land. He pays $750 to his attorney for reviewing the purchase agreement. David's initial basis in the land is a. $ - 0 - b. $ 35,000 c. $ 35,750 d. $130,000 e. $130,750 17. Buffey operates a delivery service. She purchased a van in 2006 for $25,000, and she sold it in 2008 for $15,000. Buffey did not deduct any depreciation on the van from 2006 through 2008, although total allowable depreciation on the van would have been $17,000. What is the amount of Buffey 's recognized gain or loss on the sale of the van? 18. Matt, an attorney, performs 5 hours of legal work for Andy. Matt 's normal billing rate is $120 per hour. Andy, a software consultant, gives Matt a new computer for his office in payment of the bill. The computer's adjusted basis was $550 and its fair market value is $750. Matt 's basis in the computer is
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
24.John purchases all of the common stock of Clarke Corporation for $280,000. The assets of the corporation are: Asset Adjusted Basis Fair Market Value Inventory $ 25,000 $ 50,000 Equipment 60,000 40,000 Supplies 20,000 20,000 Building 80,000 95,000 Land 10,000 20,000 $195,000 $225,000 What is John's basis in the common stock he acquired? 27. James receives a gift of rare books valued at $10,000. The books have an adjusted basis of $6,000 to the donor. No gift tax was paid on the transfer. Several months later, James sells the books to a professional collector for $9,000. What is James 's gain or (loss) on the sale? a. $1,000 gain b. $3,000 gain c. $4,000 gain d. $1,000 loss e. $3,000 loss 30. Sarah purchased a diamond bracelet for $3,000 while vacationing in Hong Kong during 1997. Sarah gives the bracelet to her daughter Amy when she graduates from college in 2008. The bracelet is appraised at $8,000 on that date. No gift tax liability was incurred. In October 2008, Amy sells the bracelet for $9,000. What is the amount of gain Amy should recognize on the sale?
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern