T11F-Chp-11-2-HW-Prb-Dispositions

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5b1a22949ae911918366f0a537c59c24cac030ec.doc. Page 1 of 3 Name: Homework-Chapter 11. Assume the depreciation computations provided in these questions are accurate, even where there are special tax rules that may require other answers (rules for year of acquisition or disposal). The current year is 2011. 1 Bob Rich purchased a tract of land for \$20,000 in 2005 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth \$200,000. Highway engineers surveyed the property and indicated that he would probably get \$175,000. The highway project was abandoned in 2011 and the land’s value fell to \$15,000. Rich can claim a loss in 2011 of : a. Zero b. \$185,000 c. \$180,000 d. \$160,000 e. \$5,000 2 In April 2011 , Pam sold stock with a basis of \$15,000 to Lisa (her sister) for \$10,000 (its FMV). Later in the year, Lisa sold the stock to her neighbor, Niki , for \$8,000. How much loss does Pam deduct? a. \$0 b. \$2,000 c. \$5,000 d. \$7,000 3 In April 2011 , Pam sold stock with a basis of \$15,000 to Lisa (her sister) for \$10,000 (its FMV). Later in the year, Lisa sold this stock to her neighbor, Niki , for \$16,000. How much gain does Lisa report? a. \$6,000 b. \$5,000 c. \$1,000 d. \$0 4 Katy and Nikki each own investment realty that they would like to trade. Katy's property has a fair market value of \$25,000, and is subject to mortgage debt of \$10,000. Nikki's property has a fair market value of \$25,000 and is subject to mortgage debt of \$17,000. Katy and Nikki agree to exchange the properties and assume each other's debt. To complete the exchange, who pays cash and how much will that person have to pay? a. Katy pays \$15,000 b. Nikki pays \$7,000. c. Nikki pays \$8,000. d. Katy pays \$7,000. e. Neither person pays anything. 5 Cathy owns property subject to a mortgage of \$5,000. Annual real estate taxes are \$1,000 and are due and payable on December 31. Cathy sells her property on July 1, 2011. The buyer assumes her \$5,000 mortgage, and Cathy agrees to finance the sale by taking a mortgage note of \$50,000 and property valued at \$7,500. The buyer agrees to pay the seller's portion of the property taxes. What is Cathy's amount realized? a.

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T11F-Chp-11-2-HW-Prb-Dispositions - Page 1 of 3 Name...

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