1.

Question:
a. b. c. d.

All of the following losses are deductible except:

decline in value of securities. total worthlessness of securities. sale or exchange of business property. destruction of personal use property by fire, storm, or casualty.

2. Question:
a. b. c. d.

The amount realized by Matt on the sale of property to Caitlin includes all of the following with the exception of: cash received by Matt. mortgage on the property that is assumed by Caitlin mortgage on the property paid off by Matt prior to the sale. the FMV of any other property received by Matt in the transaction

3. Question:

In 2000, Michael purchased land for $100,000. Over the years, economic conditions deteriorated, and the value of the land declined to $60,000. Michael sells the property in this year, when it is subject to a $30,000 nonrecourse mortgage. The buyer pays Michael $34,000 cash and takes the property subject to the mortgage. Michael incurs $5,000 in real estate commissions. Michael 's gain or loss on the sale is: a. b. c. d. $4,000 gain. $1,000 loss $36,000 loss $41,000 loss Jamie sells investment real estate for $80,000, resulting in a $15,000 loss. Jamie's loss is:

4. Question:
a. b. c. d.

an ordinary loss. a capital loss. a Sec. 1231 loss a Sec. 1244 loss

5. Question:
a. b. c. d.

Juan has a casualty loss of $32,500 on investment property, after receiving an insurance settlement. This is Juan's only casualty transaction this year. Juan's loss is: an ordinary loss. a capital loss. a Sec. 1231 loss a Sec. 1244 loss

6. Question: a.
b. c. d.

All of the following are true of losses from the sale or worthlessness of small business corporation (Section 1244) stock with the exception of: the stock must be owned by an individual or a partnership. the stock must have been issued by a domestic corporation. the stock must have been issued for cash or property other than stock or securities a single taxpayer may deduct, as ordinary losses, up to a maximum of $100,000 per tax year with the remainder treated as capital losses.

7. Question:

Stacy, who is married and sole shareholder of ABC Corporation, sold all of her stock in the corporation for $100,000. Stacy had organized the corporation in 1999 by contributing $225,000 and receiving all of the capital stock of the corporation. ABC Corporation is a domestic corporation engaged in the manufacturing of ski parkas. The stock in ABC Corporation qualified as Sec. 1244 stock. The sale results in a (n): a. b. c. d. ordinary loss of $125,000 long-term capital loss of $125,000. long-term capital loss of $100,000 and ordinary loss of $25,000. ordinary loss of $100,000 and long-term capital loss of $25,000

8. Question:

Amy, a single individual and sole shareholder of Brown Corporation, sold all of the Brown stock for $30,000. The stock basis was $150,000. Amy had owned the stock for 3 years. Brown Corporation meets the section 1244 requirements. Amy has:

a. b. c. d.

a $50,000 ordinary loss and $70,000 LTCL. a $50,000 STCL and a $70,000 LTCL. a $100,000 ordinary loss and a $20,000 LTCL. a $100,000 LTCL and a $20,000 ordinary loss.

9. Question:

Sarah had a $30,000 loss on section 1244 stock, a $15,000 loss on sale of a personal use automobile and a $8,000 loss on stock that is not classified as 1244. Without regard to net capital loss limitations, Sarah should recognize: a. a ordinary loss of $38,000. a capital loss of $53,000. an ordinary loss of $30,000 and a capital loss of $8,000. an ordinary loss of $30,000 and a capital loss of $23,000

b. c.
d.

10.Question:

During the year, Mark reports $90,000 of active business income from his law practice. He also owns two passive activities. From Activity A, he earns $20,000 of income, and from Activity B, he incurs a $30,000 loss. As a result, Mark: a. reports AGI of $80,000.

b. c. d.

reports AGI of $90,000 with a $10,000 loss carryover reports AGI of $90,000 with a $30,000 loss carryover reports AGI of $110,000 with a $30,000 loss carryover