Problem Set 7
37. Downed a building with an adjusted basis of $40,000 that was
destroyed by fire. Insurance paid $55,000 in a settlement. Assuming D
reinvests $52,000 in eligible property within the statutory period,
which of the following is a possible o
Last year, E received 50 acres of undeveloped land as a gift from her
grandmother. The land had cost$20,000 fifteen years ago, but was
appraised at $50,000 on the date of the gift. E's grandmother paid gift
taxes of $12,000 on this $36,000 taxab
R sold the family homestead to his daughter for $250,000 at a time
when its fair market value was$400,000. R's basis was $130,000. How
much gain does R realize on the transaction?
M sold a family heirloom to her nephew last year for
Which statement is not true concerning installment contracts and
The buyer is entitled to an interest deduction for paying unstated
Which one of the following losses may be recognized?
$7,000 by K, if L's adjusted ba
27. Which of the following is not true of principal residences?
"Principal residence" can refer only to property which the taxpayer
28. J sold her personal residence for $275,000. She incurred selling
expenses of $6,000 and "fix-up ex-
Problem Set 6
32. Which of the following is true of the exclusion of gain under 121?
The residence must have been used as a principal residence by the
owner/taxpayer (or spouse) for at least two years within the five-year
period ending on the date of sale
Problem Set 8
D exchanged an apartment complex that he had owned for 8 years for
farm land. The apartment com- plex was worth $1,050,000 and D's
basis was $475,000. The transferee assumed a note secured by an
interest in the property of $800,000. D receiv
Problem Set 9
49. M traded in her business computer at a local dealer. Her cost in
the old machine was $3,500 and her basis was $1,470. She paid
$1,500 cash in the trade for a computer worth $4,000. How much is
M's re- cognized gain or loss, and what is h
Problem Set 10
50. M exchanged a vacant lot worth $32,500 for farm land worth
$28,500. M received $1,000 down and will receive $1,000 per year for
each of the three following years. M's basis in the lot was $29,000.
How much gain must M recognize in each
Liabilities that reduce the amount realized from a transaction include
which of the following?
Any liabilities assumed by the seller related to the transaction.
W sold a residence for $40,000 payable as follows:
Cash down payments Existing loan