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Answer_KeyCh13 - Answer Key 1 2 3 4 5 6 7 8 9 10 11 12 13...

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Answer Key 1. A 2. D 3. B 4. B 5. C 6. C 7. B 8. C 9. C 10. C 11. A 12. D 13. B 14. B 15. B © 2004 Rockwell Publishing Company 1
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Answer Key with Explanations Question #1 Answer: A Explanation: Judy's actual capital gain is the gain on the sale of her building. She received a shopping center worth $785,000, plus $10,000 cash and $20,000 in mortgage relief, totaling $815,000. Since her cost basis apartment building is $770,000, her realized (actual) gain is $45,000. Of that, $30,000 is not like-kind property and is thus subject to tax. The remaining $15,000 is deferred gain. Question #2 Answer: D Explanation: Any of the above options could provide a federal income tax advantage. Question #3 Answer: B Explanation: If he loses money when he sells the property, he has suffered a capital loss. A capital loss on property held for investment purposes is tax-deductible. Question #4 Answer: B Explanation: As property used in a trade or business, a commercial apple orchard could be depreciated for income tax purposes.
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