Pract exam3 part15 2011 - CHAPTER 15 MULTIPLE CHOICE 1....

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CHAPTER 15 MULTIPLE CHOICE 1. Which of the following statements is correct? a. In a nontaxable exchange in which gain is realized, the transaction results in a permanent recovery of more than the taxpayer’s cost or other basis for tax purposes. b. In a nontaxable exchange in which loss is realized, the transaction results in a permanent recovery of less than the taxpayer’s cost or other basis for tax purposes. c. In a tax-free transaction in which gain is realized, the transaction results in the permanent recovery of more than the taxpayer’s cost or other basis for tax purposes. d. All of the above. e. None of the above. ANS: C Choices a. and b. result in temporary recoveries rather than permanent recoveries. PTS: 1 DIF: 1 REF: p. 15-3 OBJ: 1 NAT: AICPA FN-Measurement | AACSB Analytic MSC: 5 min 2. In order to qualify for like-kind exchange treatment under § 1031, which of the following requirements must be satisfied? a. The form of the transaction is an exchange. b. Both the property transferred and the property received are held either for productive use in a trade or business or for investment. c. The exchange must be completed by the end of the second tax year following the tax year in which the taxpayer relinquishes his or her like-kind property. d. Only a. and b. e. a., b., and c. ANS: D The time period for a nonsimultaneous like-kind exchange includes a 45-day period and an 180-day period, but does not include the period mentioned in choice c. PTS: 1 DIF: 1 REF: p. 15-4 to 15-6 OBJ: 2 NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 3. Which of the following qualify as a like-kind exchange? a. Inventory of a retail hardware store for inventory of a plumbing wholesaler. b. Investment land for a building to be used in a trade or business. 15-1
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15-2 2011 Annual Edition/Test Bank c. General partnership interest for a limited partnership interest. d. Rental house for a house to be used as a principal residence. e. None of the above. ANS: B Both the investment land and the building are realty either held for investment or used in a trade or business. PTS: 1 DIF: 1 REF: p. 15-4 | p. 15-5 OBJ: 2 NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 4. Brett owns investment land located in Tucson, Arizona. He exchanges it for other investment land. In which of the following locations may the other investment land be located and enable Brett to qualify for § 1031 like-kind exchange treatment? a. Mexico City, Mexico. b. Toronto, Canada. c. Paris, France. d. Only a. and b. e. None of the above. ANS: E Real property located in the United States exchanged for foreign real property (and vice versa) does not qualify as like-kind property. PTS: 1 DIF: 1 REF: Example 2 OBJ: 2 NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 7. Kahil exchanges a drill press that is used in his business for another drill press. The old drill press had an adjusted basis of $5,000 and the new drill press has a fair market value of $30,000. What is Kahil’s recognized gain or loss and the basis of the new drill press? a.
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This note was uploaded on 02/27/2012 for the course ECON 4371 taught by Professor Muir during the Spring '12 term at King Mongkut's Institute of Technology Ladkrabang.

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Pract exam3 part15 2011 - CHAPTER 15 MULTIPLE CHOICE 1....

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