Question 1.) The tax basis of an asset includes:

the fair market value of property received in a non-taxable exchange.

the fair market value of services given in exchange.

the amount of debt relief given in the exchange.

All of the above

Question 2. Question : (TCO 10) In general, an expenditure must be capitalized for tax purposes if:

it creates or enhances an asset with a useful life of one taxable year.

it results in no long-term benefit to the firm.

tax treatment of the expenditure is certain.

None of the above

Question 3. Question : (TCO 10) On December 15, a calendar year taxpayer placed in service $100,000 of five-year recovery property. If this was in addition to another $250,000 of assets placed into service early in the year, it will be subject to: the mid-quarter convention. the mid-month convention. the half-year convention. no convention.

Question 4. Question : (TCO 10) Bent Pretzel Inc. sold a building that it held for investment for several years. In this transaction, Bent Pretzel received land that it will use in its business. The FMV of the building is $80,000 and the value of the land is $80,000 too. The adjusted basis of the building is $55,000 and the land is $30,000.

What is Bent Pretzel's recognized gain?

$55,000

$25,000

$80,000

$0

Question 5. Question : (TCO 10) In a qualifying like-kind exchange, Van Halen exchanges musical equipment with an adjusted basis of $350,000 (fair market value of $300,000) for other musical equipment.

What is his basis in the new equipment?

$200,000

$225,000

$350,000

$230,000