ACC 401 Week 3 Quiz

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ACC 401 Week 3 Quiz

1. A taxpayer purchased land in 2006 for $85,000 and sold it in 2012 for $75,000 cash. The buyer also assumed the mortgage of $5,000. What is the amount of gain/loss on the sale of the land?

2. Which of the following expense items is (are) deductible as rental expense for a rental property?

3. Which of the following is not considered an ordinary expense for a rental activity?

4. On June 1 of the current year, Jack and Angie purchased a rental beach house for $900,000 and rented it right away. Of that amount, $600,000 was for the land value. How much depreciation deduction can Jack and Angie take in the current year? (You may need to refer to the depreciation tables.)

5. In July 2012, Cassie purchases equipment for $55,000 to be used in her business. Assuming Cassie has a small net loss from her business prior to the deduction, what is the maximum amount of cost recovery Cassie can deduct?

6. Paola purchased an office building on January 5, 2010, for $450,000. $30,000 of the price was for the land. On September 25, 2012, he sold the office building. What is the cost recovery deduction for 2012 rounded to the nearest dollar?

7. Which of the following is not a “trade or business” expense?

8. Lourdes, a sole proprietor, collected $8,650 on November 21, 2012 on some of her outstanding receivables. Her basis in these receivables was $0. What is the gain or loss Lourdes recognizes for 2012?

9. Which one of the following is Section 1231 property?

10. Trade or business expenses are treated as: