Chapter 14 Quiz - 1 Ricky owns all the stock of Amethyst,...

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1 Ricky owns all the stock of Amethyst, Inc. (adjusted basis of $100,000). If he receives a distribution from Amethyst of $94,000 and corporate earnings and profits are $0, Ricky has a capital loss of $6,000. Choose one answer. b. False Correct Correct. Question 2 If a buyer assumes the seller's liability on the property acquired, the buyer's adjusted basis for the property is decreased by the amount of the liability assumed. Choose one answer. b. False Correct Question 3 If insurance proceeds are received for property used in a trade or business, a casualty transaction can result in recognized gain or recognized loss. Choose one answer. a. True Correct Correct. Question 4 Monroe's delivery truck is damaged in an accident. Monroe's adjusted basis for the delivery truck prior to the accident is $20,000. If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000, his adjusted basis for the delivery truck after the accident is $22,000. Choose one answer. b. False Correct Correct. Question 5 The bank forecloses on Lisa's apartment complex. The property had been pledged as security on a nonrecourse mortgage, whose principal amount at the date of foreclosure is $750,000. The adjusted basis of the property is $480,000, and the fair market value is $750,000. What is Lisa's recognized gain or loss? Choose one answer. a. $270,000. Correct Correct. Question 6 Thomas owns all of the stock of Amber Corporation. The accumulated earnings and profits of Amber Corporation at the end of the year are a deficit of $60,000. The current earnings and profits are $0. Thomas' basis for his stock is $312,000. He receives a distribution of $275,000 on the last day of the tax year. How much gain should Thomas report? Choose one answer.
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a. $0. Correct Question 7 Noelle owns an automobile which she uses for personal use. Her adjusted basis is $22,000 (i.e., the original cost). The car is worth $15,000. Which of the following statements is correct? Choose one answer. e. a., b., and c. are correct. Correct Correct. Question 8 Alvin is employed by a company as its president. He purchased a SUV from it for $20,000 (fair market value was $41,000). He is the only employee permitted such a discount. What is Alvin's original cost basis in the truck? Choose one answer. c. $41,000. Correct 1 If Wal-Mart stock increases in value during the tax year by $4,500, the amount realized is a positive $4,500. Choose one answer. b. False Correct Correct. Question 2 Bond premium on tax-exempt bonds must be amortized. The annual amortization reduces taxable income and decreases the adjusted basis for the bond. Choose one answer. b. False Correct Question 3 A realized loss whose recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis. Choose one answer.
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This note was uploaded on 04/03/2011 for the course ACC 3400 taught by Professor Balden during the Spring '11 term at Utah Valley University.

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Chapter 14 Quiz - 1 Ricky owns all the stock of Amethyst,...

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