Marks 1 which of the following statements are correct

Question 5
Marks: 1
Which of the following statements are correct?
(1.) A sale is generally a transfer of property for money only or for a promise to pay
money.
(2.) An exchange is a transfer of property in return for other property or services.
(3.) Recognized gain is always the excess of the amount realized over the adjusted
basis of the property.
(4.) Realized loss is always the excess of the adjusted basis of the property over the
amount realized.
(5.) The adjusted basis of the property is always the original cost adjusted for such
items as casualty losses, improvements, and depreciation.
Choose one answer.
a. 1, 2, and 3
b. 1, 2, and 4
c. 1, 3, and 4
d. 1, 4, and 5
e. 2, 3, and 4
Statements 1, 2, and 4 are correct. Statement 3 is not correct because it is defining
realized gain rather than recognized gain, and all realized gain is not recognized.
Statement 5 is not correct because cost is not always the starting point in figuring basis,
e.g., in the case of inherited property or property received by gift.
* This question has been adapted from the IRS Examinations.
Correct
Marks for this submission: 1/1.
Question 6
Marks: 1

Bill Binkley's office building with a basis of $480,000 is condemned by the state. The
state awards him $600,000 and he then purchases a new office building for $520,000.
What is Bill's basis in the new residence?
Choose one answer.
Correct
Marks for this submission: 1/1.
Question 7
Marks: 1
Ben Benson, single, sold his home that he had owned for 20 years for $695,000. He
purchased it for $140,000 and made $45,000 of capital improvements on the home
during his time of ownership. How much gain is excluded?
Choose one answer.
Incorrect
Marks for this submission: 0/1.
Question 8
Marks: 1
Ruth Rumsfeld inherited a home in 2011 that had a basis to her of $100,000. She
moved into the inherited home and made it her new principal residence. She sold her
former principal residence she had lived in for the past six years for $90,000, realizing a

gain of $20,000. She must report the $20,000 gain because she did not reinvest the
proceeds in her new principal residence.
Correct
Marks for this submission: 1/1.