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Multiple Choice Questions 26.Which statement best describes the concept of realization

Question : Multiple Choice Questions 26.Which statement best describes the concept of realization : 1856828

Multiple Choice Questions

26.Which statement best describes the concept of realization as it applies to gain or loss?

A. Realization is the recording of gain or loss on a tax return.

B. Realization is the result of an exchange of property rights in a transaction.

C. Realization is the excess of amount realized over adjusted basis.

D. Realization is the excess of adjusted basis over amount realized.

27.Which of the following amounts is not included in the computation of amountrealized in an exchange?

A. Cash received

B. Fair market value of property received

C. Selling expenses

D. Adjusted basis of property transferred

28.Which of the following amounts is not included in the computation of a property's adjusted basis in an exchange?

A. Selling expenses incurred by the buyer

B. Acquisition cost of the buyer

C. Capital improvements made to the property by the buyer

D. Depreciation of the property by the buyer

29.Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?

A. Gain and loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.

B. Gain and loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code.

C. Gain realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.

D. Loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but gain realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.

30.Which of the following requirements do not have to be met in a section 351 transaction?

A. Each transferor of property must receive stock equal to at least 80 percent of the fair market value of the property transferred.

B. In the aggregate, the transferors of property to the corporation must collectively control the corporation immediately after the transfers.

C. Only property transferred to a corporation is eligible for deferral.

D. All transfers of property to a corporation must be made simultaneously to qualify for deferral.

31.Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange?

A. $500

B. $400

C. $350

D. $250

32.Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

A. $150

B. $200

C. $250

D. $300

33.Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?

A. $600

B. $550

C. $500

D. $450

34.Camille transfers property with a tax basis of $800 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $850 and $350 in cash in a transaction that qualifies for deferral under section 351. Camille also incurred selling expenses of $100. What is the amount realized by Camille in the exchange?

A. $1,200

B. $1,100

C. $850

D. $750

35.Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?

A. $800

B. $600

C. $550

D. $450

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