1. Inspired by B428, Frank Frenzy enters the real estate business as a sole propietor. He gets his sales agent license and handles 20 sales his first two years. Along the way he buys and sells several properties in his own name. In March of the next year he is talking with his accountant, Gertrude Greenshades. The real estate market has been rising and every sale Frank made resulted in a "gain." "I'll get taxed at a lower rate because I held the properties for more than a year, right?" he says to Gertrude. Which of the following is MOST correct?

A. Frank will get capital gains treatment since he has his real estate license and that is a seperate business.

B. Frank won't get capital gains treatment because he must hold properties for at least five years.

C. Frank will get capital gains treatment because each property was purchased for investment purposes.

D. Frank probably won't get capital gains treatment if he bought and sold several properties because it may mean he is in the business of buying and selling property and thus it is his stock in trade.

2. Which of the following are true about exchanges of property under section 1031 IRC?

A. Gain is not recognized at the time the exchange is made unless there is "boot."

B. The basis of the acquired property is equal to the basis in the exchanged property plus any boot that was paid.

C. It is not possible to sell the property, identify a property to exchange for, complete the transaction and still be within the bounds of the exchange rules.

D. A & C, but not B

E. A, B, & C

F. None (A,B, or C) is true.