1. Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $80,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale? (Points: 6)

1- $90,000

2- $125,000

3- $80,000

4- $70,000

2. Ben's property, which has an adjusted basis of $25,000, is condemned by the state government. The authorities replace his property with other qualified property which cost them $120,000. What is Ben's recognized gain? (Points: 6)

1- $35,000

2- $85,000

3- $120,000

4- $0

3. Sean, a calendar year taxpayer, purchased stock on June 18, 2006, for $7,000. The stock became worthless on June 4, 2007. What is Sean's loss in 2007?

1- $7,000 long-term capital loss

2- $7,000 short-term capital loss

3- No loss

4- $7,000 itemized deduction for investments