15/06/2023j12:54 Chapterj13j-jTestjBankj-jtestjbank
CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1473.jRealizedjgainjorjlossjisjmeasuredjbyjthejdifferencejbetweenjthejamountjrealizedj fro
mjthejsalejorjotherjdispositionjofjpropertyjandjthejproperty’sjadjustedjbasisjatjthejdatej ofjdi
sposition.
*a.jTrue
b.jFalse
1474.jMolandajsellsjajparceljofjlandjforj$18,000jinjcashjandjthejbuyerjassumesj Molanda’
sjmortgagejofj$12,000jonjthejland.jMolanda’sjamountjrealizedjisj$18,000.
a. True
*b.jFalse
1475.jIfjWal-
Martjstockjincreasesjinjvaluejduringjthejtaxjyearjbyj$4,500,jthejamountj realizedjisjajpositi
vej$4,500.
a. True
*b.jFalse
1476.jIfjthejbuyerjassumes jthejseller’sjliabilityjonjthejpropertyjacquired,jthejseller’sj amou
ntjrealizedjisjincreasedjbyjthejamountjofjthejliabilityjassumed.
*a.jTrue
b. False
1477.jThejfairjmarketjvaluejofjpropertyjreceivedjinjajsalejorjotherjdispositionjisjthejpricej at
jwhichjpropertyjwilljchange jhands jbetweenjajwillingjsellerjandjajwillingjbuyerjwhenj neith
erjisjcompelledjtojselljorjbuy.
*a.jTrue
b.jFalse
1478.jIfjajsellerjassumes jthejbuyer’sjliabilityjonjthejpropertyjacquired,jthejbuyer’sj adjuste
djbasisjforjthejpropertyjisjdecreasedjbyjthejamountjofjthejliabilityjassumed.
*a.jTrue
b.jFalse
about:blank 1/94
,15/06/2023j12:54 Chapterj13j-jTestjBankj-jtestjbank
CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1479.jExpendituresjmadejforjordinaryjrepairsjandjmaintenancejofjpropertyjarejnotjaddedj t
ojthejoriginaljbasisjinjthejdeterminationjofjthejproperty’sjadjustedjbasisjwhereasjcapitalj ex
pendituresjarejaddedjtojthejoriginaljbasis.
*a.jTrue
b.jFalse
1480.jLouisjpurchasesjlandjandjanjofficejbuildingjforjhisjbusinessjforj$150,000jwith
$50,000jbeingjallocatedjtojthejland.jDuringjthejfirstjyear,jLouisjdeductsjcostjrecoveryjof
$2,247.jLouis’jadjustedjbasisjforjthejbuildingjatjthejendjofjthejfirstjyearjisj$97,753j ($100,0
00j–j$2,247).
*a.jTrue
b.jFalse
1481.jThejadjustedjbasisjofjpropertyjthatjisjstolenjisjreducedjbyjthejamountjofjinsurancej pr
oceedsjreceivedjandjbyjanyjrecognizedjloss.
*a.jTrue
b.jFalse
1482.jMonroe’sjdeliveryjtruckjisjdamagedjinjanjaccident.jMonroe’sjadjustedjbasisjforjthej del
iveryjtruckjpriorjtojthejaccidentjisj$20,000.jIfjMonroejreceivesjinsurancejproceedsjof
$21,000jandjrecognizesjajcasualtyjgainjofj$1,000,jhisjadjustedjbasisjforjthejdeliveryjtruckj aft
erjthejaccidentjisj$21,000.
a. True
*b.jFalse
1483.jIfjinsurancejproceedsjarejreceivedjforjpropertyjusedjinjajtradejorjbusiness,jaj casualty
jtransactionjcanjresultjinjrecognizedjgainjorjrecognizedjloss.
*a.jTrue
b. False
1484.jIfjthejamountjofjajcorporatejdistributionjisjlessjthanjthejamountjofjthejcorporatej ea
rningsjandjprofits,jthejreturnjofjcapitaljconceptjdoesjnotjapplyjandjthejshareholders’j adj
ustedjbasisjforjthejstockjremainsjunchanged.
about:blank 2/94
,15/06/2023j12:54 Chapterj13j-jTestjBankj-jtestjbank
CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
*a.jTrue
b.jFalse
1485.jRickyjownsjalljthejstockjofjAmethyst,jInc.j(adjustedjbasisjofj$72,000).jIfjhej receives
jaj distributionj fromjAmethystj ofj $65,000jandj corporatej earningsjandj profitsj are
$15,000,jRickyjhasjajcapitaljgainjofj$7,000jandjanjadjustedjbasisjforjhisjAmethystjstockj of
j$0.
a. True
*b.jFalse
1486.jThejamountjofjajcorporatejdistributionjqualifyingjforjcapitaljrecoveryjtreatmentj whi
chjexceedsjthejrecipient’sjstockjbasisjisjtreatedjasjanjordinaryjgain.
a. True
*b.jFalse
1487.jThejadjustedjbasisjforjajtaxablejbondjpurchasedjatjajpremiumjisjreducedjifjthej a
mortizationjelectionjisjmade.jThejamountjofjthejamortizedjpremiumjisjtreatedjasjanj int
erestjdeduction.
*a.jTrue
b. False
1488.jGingerjpurchasesjaj$1,000jcorporatejbondjatjajpremiumjofj$100jandjelectsjtoj amorti
zejthejpremium.jOnjthejlaterjsalejofjthejbondjforj$1,090,jshejhasjamortizedj$30jofj thejpre
mium.jGingerjhasjajrecognizedjgainjofj$120j($1,090jamountjrealizedj–
j$970j adjustedjbasis).
a. True
*b.jFalse
1489.jThejamountjreceivedjforjajutilityjeasementjonjlandjisjincludedjinjthejgrossjincomej o
fjthejtaxpayer.
a. True
*b.jFalse
about:blank 3/94
, 15/06/2023j12:54 Chapterj13j-jTestjBankj-jtestjbank
CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1490.jAjrealizedjgainjonjthejsalejorjexchangejofjajpersonaljusejassetjisjrecognized,jbutjaj re
alizedjlossjonjthejsale,jexchange,jorjcondemnationjofjajpersonaljusejassetjisjnotj recognized
.
*a.jTrue
b. False
1491.jAjrealizedjgainjwhosejrecognitionjisjpostponedjresultsjinjthejtemporaryjrecoveryjofj m
orejthanjthejtaxpayer’sjcostjorjotherjbasis.
*a.jTrue
b.jFalse
1492.jAjrealizedjlossjwhosejrecognitionjisjpostponedjresultsjinjthejtemporaryjrecoveryjofj mo
rejthanjthejtaxpayer’sjcostjorjotherjbasis.
a. True
*b.jFalse
1493.jAsjcompensationjforjherjservices,jLesliejpurchasesjrealjestatejfromjherjemployerj fo
rjlessjthanjfairjmarketjvalue.jLeslie’sjbasisjforjthejrealjestatejisjitsjfairjmarketjvalue.
*a.jTrue
b. False
1494.jWhenjajtaxpayerjhasjpurchasedjseveraljlotsjofjstockjonjdifferentjdatesjatjdifferentj pu
rchasejpricesjandjcannotjidentifyjthejlotjofjstockjthatjisjbeingjsold,jhejshouldjusejaj weighte
djapproach.
a. True
*b.jFalse
1495.jCassiejpurchasesjajsolejproprietorshipjforj$125,000.jThejfairjmarketjvaluejofjthej ta
ngiblejassetsjisj$100,000jandjthejagreedjtojvaluejofjgoodwilljisj$15,000.jAssumingj therej
arejnojotherjintangiblejassets,jCassie’sjbasisjforjthejtangiblejassetsjisj$108,696j ($100,000
j+j$8,696)jandjherjbasis jforjthe jgoodwilljis j$16,304j($15,000j+j$1,304).
a. True
*b.jFalse
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CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1473.jRealizedjgainjorjlossjisjmeasuredjbyjthejdifferencejbetweenjthejamountjrealizedj fro
mjthejsalejorjotherjdispositionjofjpropertyjandjthejproperty’sjadjustedjbasisjatjthejdatej ofjdi
sposition.
*a.jTrue
b.jFalse
1474.jMolandajsellsjajparceljofjlandjforj$18,000jinjcashjandjthejbuyerjassumesj Molanda’
sjmortgagejofj$12,000jonjthejland.jMolanda’sjamountjrealizedjisj$18,000.
a. True
*b.jFalse
1475.jIfjWal-
Martjstockjincreasesjinjvaluejduringjthejtaxjyearjbyj$4,500,jthejamountj realizedjisjajpositi
vej$4,500.
a. True
*b.jFalse
1476.jIfjthejbuyerjassumes jthejseller’sjliabilityjonjthejpropertyjacquired,jthejseller’sj amou
ntjrealizedjisjincreasedjbyjthejamountjofjthejliabilityjassumed.
*a.jTrue
b. False
1477.jThejfairjmarketjvaluejofjpropertyjreceivedjinjajsalejorjotherjdispositionjisjthejpricej at
jwhichjpropertyjwilljchange jhands jbetweenjajwillingjsellerjandjajwillingjbuyerjwhenj neith
erjisjcompelledjtojselljorjbuy.
*a.jTrue
b.jFalse
1478.jIfjajsellerjassumes jthejbuyer’sjliabilityjonjthejpropertyjacquired,jthejbuyer’sj adjuste
djbasisjforjthejpropertyjisjdecreasedjbyjthejamountjofjthejliabilityjassumed.
*a.jTrue
b.jFalse
about:blank 1/94
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CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1479.jExpendituresjmadejforjordinaryjrepairsjandjmaintenancejofjpropertyjarejnotjaddedj t
ojthejoriginaljbasisjinjthejdeterminationjofjthejproperty’sjadjustedjbasisjwhereasjcapitalj ex
pendituresjarejaddedjtojthejoriginaljbasis.
*a.jTrue
b.jFalse
1480.jLouisjpurchasesjlandjandjanjofficejbuildingjforjhisjbusinessjforj$150,000jwith
$50,000jbeingjallocatedjtojthejland.jDuringjthejfirstjyear,jLouisjdeductsjcostjrecoveryjof
$2,247.jLouis’jadjustedjbasisjforjthejbuildingjatjthejendjofjthejfirstjyearjisj$97,753j ($100,0
00j–j$2,247).
*a.jTrue
b.jFalse
1481.jThejadjustedjbasisjofjpropertyjthatjisjstolenjisjreducedjbyjthejamountjofjinsurancej pr
oceedsjreceivedjandjbyjanyjrecognizedjloss.
*a.jTrue
b.jFalse
1482.jMonroe’sjdeliveryjtruckjisjdamagedjinjanjaccident.jMonroe’sjadjustedjbasisjforjthej del
iveryjtruckjpriorjtojthejaccidentjisj$20,000.jIfjMonroejreceivesjinsurancejproceedsjof
$21,000jandjrecognizesjajcasualtyjgainjofj$1,000,jhisjadjustedjbasisjforjthejdeliveryjtruckj aft
erjthejaccidentjisj$21,000.
a. True
*b.jFalse
1483.jIfjinsurancejproceedsjarejreceivedjforjpropertyjusedjinjajtradejorjbusiness,jaj casualty
jtransactionjcanjresultjinjrecognizedjgainjorjrecognizedjloss.
*a.jTrue
b. False
1484.jIfjthejamountjofjajcorporatejdistributionjisjlessjthanjthejamountjofjthejcorporatej ea
rningsjandjprofits,jthejreturnjofjcapitaljconceptjdoesjnotjapplyjandjthejshareholders’j adj
ustedjbasisjforjthejstockjremainsjunchanged.
about:blank 2/94
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CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
*a.jTrue
b.jFalse
1485.jRickyjownsjalljthejstockjofjAmethyst,jInc.j(adjustedjbasisjofj$72,000).jIfjhej receives
jaj distributionj fromjAmethystj ofj $65,000jandj corporatej earningsjandj profitsj are
$15,000,jRickyjhasjajcapitaljgainjofj$7,000jandjanjadjustedjbasisjforjhisjAmethystjstockj of
j$0.
a. True
*b.jFalse
1486.jThejamountjofjajcorporatejdistributionjqualifyingjforjcapitaljrecoveryjtreatmentj whi
chjexceedsjthejrecipient’sjstockjbasisjisjtreatedjasjanjordinaryjgain.
a. True
*b.jFalse
1487.jThejadjustedjbasisjforjajtaxablejbondjpurchasedjatjajpremiumjisjreducedjifjthej a
mortizationjelectionjisjmade.jThejamountjofjthejamortizedjpremiumjisjtreatedjasjanj int
erestjdeduction.
*a.jTrue
b. False
1488.jGingerjpurchasesjaj$1,000jcorporatejbondjatjajpremiumjofj$100jandjelectsjtoj amorti
zejthejpremium.jOnjthejlaterjsalejofjthejbondjforj$1,090,jshejhasjamortizedj$30jofj thejpre
mium.jGingerjhasjajrecognizedjgainjofj$120j($1,090jamountjrealizedj–
j$970j adjustedjbasis).
a. True
*b.jFalse
1489.jThejamountjreceivedjforjajutilityjeasementjonjlandjisjincludedjinjthejgrossjincomej o
fjthejtaxpayer.
a. True
*b.jFalse
about:blank 3/94
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CHAPTERj 13
PropertyjTransactions:jDeterminationjofjGainjorjLoss,jBasisjConsiderations,jandj Nontaxabl
ejExchanges
1490.jAjrealizedjgainjonjthejsalejorjexchangejofjajpersonaljusejassetjisjrecognized,jbutjaj re
alizedjlossjonjthejsale,jexchange,jorjcondemnationjofjajpersonaljusejassetjisjnotj recognized
.
*a.jTrue
b. False
1491.jAjrealizedjgainjwhosejrecognitionjisjpostponedjresultsjinjthejtemporaryjrecoveryjofj m
orejthanjthejtaxpayer’sjcostjorjotherjbasis.
*a.jTrue
b.jFalse
1492.jAjrealizedjlossjwhosejrecognitionjisjpostponedjresultsjinjthejtemporaryjrecoveryjofj mo
rejthanjthejtaxpayer’sjcostjorjotherjbasis.
a. True
*b.jFalse
1493.jAsjcompensationjforjherjservices,jLesliejpurchasesjrealjestatejfromjherjemployerj fo
rjlessjthanjfairjmarketjvalue.jLeslie’sjbasisjforjthejrealjestatejisjitsjfairjmarketjvalue.
*a.jTrue
b. False
1494.jWhenjajtaxpayerjhasjpurchasedjseveraljlotsjofjstockjonjdifferentjdatesjatjdifferentj pu
rchasejpricesjandjcannotjidentifyjthejlotjofjstockjthatjisjbeingjsold,jhejshouldjusejaj weighte
djapproach.
a. True
*b.jFalse
1495.jCassiejpurchasesjajsolejproprietorshipjforj$125,000.jThejfairjmarketjvaluejofjthej ta
ngiblejassetsjisj$100,000jandjthejagreedjtojvaluejofjgoodwilljisj$15,000.jAssumingj therej
arejnojotherjintangiblejassets,jCassie’sjbasisjforjthejtangiblejassetsjisj$108,696j ($100,000
j+j$8,696)jandjherjbasis jforjthe jgoodwilljis j$16,304j($15,000j+j$1,304).
a. True
*b.jFalse
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