Members of his family were interested in purchasing

58.
members of his family were interested in purchasing the stock. In order to preserve the loss deduction,
which of the following family members should Ralph sell his stock to?
Grandfather a.
Half-sister b.
Ralph, Inc. (Ralph’s 51% owned corporation) c.
Cousin d.
Which of the following statements is not true concerning installment reporting? 59.
At least one payment is to be received after the close of the year in which a sale of property is made.
On January 1, 2010, Daniel Durrow owned rental property which had an adjusted basis to him of $250,000. 60.
Daniel made the following expenditures during 2010:
Ordinary painting of building $ 5,000
Repair of roof section (useful life not appreciably extended) 2,500
Legal fees paid to defend title 10,000
Property taxes 6,000
Assessment for local street improvement (value of property increased greatly) 15,000
Not considering depreciation, what is Daniel’s basis in the property at year-end?

543 Testbank
© 2010 CCH. All Rights Reserved. Chapter 10
On October 7, 2010, Grace Gems purchased a going business for the lump-sum price of $200,000. The fair 61.
market values of the assets Grace purchased were as follows:
U.S. government securities $10,000
Land 36,000
Building 90,000
Equipment 15,000
Furniture 9,000
What is Grace’s basis in the building?
e.
In 2010, Leon Longrove sold a piece of business equipment that had an adjusted basis to him of $50,000 62.
for $75,000 cash plus artwork that had a fair market value of $25,000. The buyer assumed Leon’s $20,000
loan on the equipment. Leon paid $5,000 in selling expenses. What is the amount of Leon’s gain on the
sale?
$25,000 a.
$45,000 b.
$65,000 c.
$75,000 d.
None of the above e.
Recognized gain or loss is the term used to describe: 63.
a taxpayer’s amount of true economic gain or loss when property is disposed. a.
the amount of realized gain or loss taxpayers report on their tax returns. b.
an amount that does not affect the taxpayer’s tax liability. c.
none of the above. d.
An example of a basket purchase is: 64.
the purchase of real property with one or more items of personal property. a.
the purchase of land and a building for a single, lump-sum amount. b.
two separate property purchases completed one right after another. c.
both a and b. d.
all of the above. e.
Losses between related parties are: 65.
always realized, but never recognized. a.
always recognized, but never realized. b.
always realized and recognized. c.
never realized and recognized. d.
Under the rules of constructive ownership: 66.
if a partnership with two equal partners owns 10 percent of the stock in a corporation, each partner is a.