Question

1)Which of the following is not taken into consideration in computing the seller's amount realized from the exchange of property?

a.   Debt that the buyer assumes

b.   Commissions paid by the seller

c.   Legal fees paid by the seller in conjunction with the sale

d.   All of the above are taken into consideration in computing amount realized

e.   None of the above are taken into consideration in computing amount realized

2) An apartment building owned by Frank was condemned by the state on November 12, 2015. Frank received the condemnation award on February 1, 2016. What is the last date that Frank can acquire appropriate replacement property if he wants to qualify for nonrecognition treatment?

a.   November 12, 2018

b.   November 12, 2019

c.   December 31, 2018

d.   December 31, 2019

e.   February 1, 2019

3) Nate sold his main home for $400,000. He paid commissions totaling $20,000. Nate, who is single, purchased the home 15 years ago for $110,000. Over the years, he has spent $13,000 on improvements and $22,000 on repairs to the home. Nate's recognized gain is:

a.   $0

b.   $20,000.

c.   $7,000.

d.   $270,000.

e.   $257,000.

Answer 1

1) option (C) is correct.

Reason when calculating Realised gain all the sales related expenses should be considered two cost are sales related.and debt assume by buyer is part of consideration.

2)option (A) is correct.

Reason Property should be purchased within 3 years period

3)option (E) is correct.

net cosideration(400000-20000) 380000

basis price (110000)

Improvement cost (22000)

Realised gain 257000

note repair expenses are not deductible.