Assignment

Question 1 The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.
True
False

Question 2 The exchange of shares of stock does not qualify for like-kind exchange treatment.
True
False

Question 3 The amount of ordinary income recognized on the sale of a Section 1245 asset is limited to the total gain realized on the sale.
True
False

Question 4 If insurance proceeds exceed the taxpayer's basis in property destroyed by fire, the taxpayer may be required to recognize a gain.
True
False

Question 5 If not entirely used in one sale, the unused portion of the $250,000 exclusion on the sale of a taxpayer's principal residence may be used to reduce the recognized gain on the sale of the taxpayer's next residence.
True
False

Question 6 If the proceeds from the sale of property will be collected over a period of more than one year, a taxpayer is required to use the installment method.
True
False

Question 7 The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.
True
False

Question 8 If property is received from a decedent, the taxpayer who receives the property has the same basis in the property as the decedent.
True
False

Question 9 There is no limit on the amount of capital losses that an individual may deduct against ordinary income.
True
False

Question 10 Taxpayers are allowed to offset net short-term capital losses with net long-term capital gains.
True
False

Question 11 The exchange of inventory does not qualify for like-kind exchange treatment.
True
False

Question 12 Assuming a taxpayer has no other gains or losses for the year, a loss from the theft of a Section 1231 asset is treated as a capital loss.
True
False

Question 13 In a like-kind exchange, relief from a liability is treated as boot.
True
False

Question 14 In the current year, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.
True
False

Question 15 To have the like-kind exchange provisions apply, a taxpayer must make an election.
True
False

Question 16 The depreciation recapture provisions are designed to prevent taxpayers from converting capital gains into ordinary income.
True
False

Question 17 An artist's painting is not a capital asset when held by the artist.
True
False

Question 18 The basis of property received as an inheritance is generally equal to the fair market value at the date of death.
True
False

Question 1

Perry acquired raw land as an investment 15 years ago. The land cost $60,000. In the current tax year, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer's note for $110,000. If Perry elects to recognize the entire gain in the year of sale, what is his recognized gain in the current tax year?
$50,000
$60,000
$100,000
$110,000
None are correct.