25 May Question 1. Realized gain or loss is measured by the difference between the amoun
Question
1. Realized gain or loss is measured by the difference between the amount realized from the sale or other disposition of property and the property’s adjusted basis at the date of disposition.
a. True
b. False
2. In computing the amount realized when the fair market value of the property received cannot be determined, the fair market value of the property surrendered may be used.
a. True
b. False
3. If Wal-Mart stock increases in value during the tax year by $6,000, the amount realized is a positive $6,000.
a. True
b. False
4. If the buyer assumes the seller’s liability on the property acquired, the seller’s amount realized is decreased by the amount of the liability assumed.
a. True
b. False
5. The fair market value of property received in a sale or other disposition is the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.
a. True
b. False
6. If a seller assumes the buyer’s liability on the property acquired, the buyer’s adjusted basis for the property is increased by the amount of the liability assumed.
a. True
b. False
7. Expenditures made for ordinary repairs and maintenance of property are notadded to the original basis in the determination of the property’s adjusted basis whereas capital expenditures are added to the original basis.
a. True
b. False
8. Milton purchases land and a factory building for his business for $300,000 with $100,000 being allocated to the land. During the first year, Milton deducts cost recovery of $4,922. Milton’s adjusted basis for the building at the end of the first year is $195,078 ($200,000 – $4,922).
a. True
b. False
9. In a casualty or theft, the basis of property involved is reduced by the amount of insurance proceeds received and by any resulting recognized loss.
a. True
b. False
10.Monroe’s delivery truck is damaged in an accident. Monroe’s adjusted basis for the delivery truck prior to the accident is $20,000. If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000, his adjusted basis for the delivery truck after the accident is $21,000.
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