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Questions and Answers
What is the adjusted cost basis of the building being sold by James?
What is the adjusted cost basis of the building being sold by James?
What is the nature of Judy's capital gain from the transaction with Bruce?
What is the nature of Judy's capital gain from the transaction with Bruce?
What is the deferred gain available to Judy in the exchange?
What is the deferred gain available to Judy in the exchange?
Which of the following can result in a tax advantage related to real estate transactions?
Which of the following can result in a tax advantage related to real estate transactions?
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What is the time frame during which tax-deferred exchanges must be completed?
What is the time frame during which tax-deferred exchanges must be completed?
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Which of the following expenses is not tax-deductible?
Which of the following expenses is not tax-deductible?
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What is the correct cost basis for the new house purchased for $657,000?
What is the correct cost basis for the new house purchased for $657,000?
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On what basis is a property considered for tax-free exchange?
On what basis is a property considered for tax-free exchange?
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What is a requirement for a property to be exchanged in a like-kind exchange?
What is a requirement for a property to be exchanged in a like-kind exchange?
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What type of property may be used in an exchange?
What type of property may be used in an exchange?
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Which type of property can be depreciated for income tax purposes?
Which type of property can be depreciated for income tax purposes?
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Which of these expenses can be deducted from ordinary income for tax purposes?
Which of these expenses can be deducted from ordinary income for tax purposes?
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What does it mean if the basis of a property decreases?
What does it mean if the basis of a property decreases?
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What is required for property to be validly exchanged in trade or investment purposes?
What is required for property to be validly exchanged in trade or investment purposes?
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Which financial reporting method may an owner of an apartment complex use?
Which financial reporting method may an owner of an apartment complex use?
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Study Notes
Chapter 13 Quiz - Study Notes
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Question 1: Judy owns an apartment building worth $800,000 with a $770,000 adjusted cost basis and a $720,000 mortgage. She exchanges it for a shopping center worth $785,000 with a $700,000 mortgage and $10,000 cash. Judy's actual gain is $45,000, with $15,000 deferred gain.
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Question 2: Tax advantages can result from tax-free exchanges, installment sales, and depreciation deductions.
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Question 3: Adam, holding unimproved property for investment, can deduct losses on the sale of the property, not annual appreciation.
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Question 4: Depreciable properties include commercial apple orchards, not owner-occupied farmhouses, vacant land, or any of the above.
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Question 5: Depreciation on real property lowers the property's basis, not increases it or makes it worthless.
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Question 6: Selling a home can result in a capital gain or loss.
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Question 7: Married couples or individuals residing in a principal residence for at least two years qualify for the capital gain exclusion.
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Question 8: Tax-free exchanges involve exchanging like-kind properties used in trade or business or held for income. Personal residences can be exchanged for similar properties.
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Question 9: A property must be improved and used in business or held for investment to be tax-depreciable.
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Question 10: Tax-deductible expenses for personal residences include cleaning and maintenance, but not cleaning, repair, or property taxes and interest.
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Question 11: An owner is not allowed to deduct painting a bathroom, the cost of uninsured fire damage, property taxes, or mortgage interest on their owner-occupied residence.
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Question 12: Seymour's recognized gain in selling his home is $125,000. The cost basis of his new home is $657,000.
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Question 13: Kathy and John will pay capital gains tax on $32,000.
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Question 14: Condominium owners can deduct interest on a mortgage on common areas, but not unit repairs.
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Question 15: Lost income from vacancy is not tax-deductible.
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Description
Test your knowledge on taxation concepts in Chapter 13. This quiz covers topics such as tax-free exchanges, depreciation deductions, and the implications of selling property. Assess your understanding of how these elements affect capital gains and losses.
