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South Western Federal Taxation 2018 Essentials of Taxation Individuals and Business Entities 21st Edition Raabe Test Bank
South Western Federal Taxation 2018 Essentials of Taxation Individuals and Business Entities 21st Edition Raabe Test Bank
2. In computing the amount realized when the fair market value of the property received cannot be determined, the fair
market value of the property surrendered may be used.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Application
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
3. If Wal-Mart stock increases in value during the tax year by $6,000, the amount realized is a positive $6,000.
a. True
b. False
ANSWER: False
RATIONALE: Increases or decreases in the value of an asset during the tax year do not affect the amount
realized. The amount realized can only be determined following sale, exchange, or other
disposition of the property.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
4. If the buyer assumes the seller’s liability on the property acquired, the seller’s amount realized is decreased by the
amount of the liability assumed.
a. True
b. False
ANSWER: False
RATIONALE: The seller’s amount realized is increased (not decreased) by the amount of the seller’s
liabilities assumed by the buyer.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
5. The fair market value of property received in a sale or other disposition is the price at which property will change hands
between a willing seller and a willing buyer when neither is compelled to sell or buy.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
Copyright Cengage Learning. Powered by Cognero. Page 2
Chapter 07: Basis, Gain and Loss, and Nontaxable Exchanges
AICPA: FN-Measurement
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
6. If a seller assumes the buyer’s liability on the property acquired, the buyer’s adjusted basis for the property is increased
by the amount of the liability assumed.
a. True
b. False
ANSWER: False
RATIONALE: In this situation, the buyer’s adjusted basis is decreased (not increased) by the amount of
liability assumed.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
7. Expenditures made for ordinary repairs and maintenance of property are not added to the original basis in the
determination of the property’s adjusted basis whereas capital expenditures are added to the original basis.
a. True
b. False
ANSWER: True
RATIONALE: Only expenditures that are capitalized are added to a property’s adjusted basis.
Expenditures for ordinary repairs and maintenance may be deductible in the current tax
year if they are for business or income-producing property.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
8. Milton purchases land and a factory building for his business for $300,000 with $100,000 being allocated to the land.
During the first year, Milton deducts cost recovery of $4,922. Milton’s adjusted basis for the building at the end of the
first year is $195,078 ($200,000 – $4,922).
a. True
b. False
ANSWER: True
RATIONALE: Cost recovery reduces the adjusted basis of the building.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Application
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
9. In a casualty or theft, the basis of property involved is reduced by the amount of insurance proceeds received and by
any resulting recognized loss.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
10. Monroe’s delivery truck is damaged in an accident. Monroe’s adjusted basis for the delivery truck prior to the accident
is $20,000. If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000, his adjusted basis
for the delivery truck after the accident is $21,000.
a. True
b. False
ANSWER: False
RATIONALE: Initially, Monroe does increase the adjusted basis of the delivery truck by the casualty gain
of $1,000 ($20,000 + $1,000 = $21,000). However, Monroe must then reduce the adjusted
basis of the delivery truck by the amount of the insurance proceeds received ($21,000 –
$21,000 = $0). Thus, Monroe now has two assets; cash of $21,000 and a delivery truck
with an adjusted basis of $0. Note that if Monroe uses some or all of the cash to repair the
delivery truck, the adjusted basis of the delivery truck is increased by this amount.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Application
OTHER: Time: 5 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
11. If insurance proceeds are received for property used in a trade or business, a casualty transaction can result in
recognized gain, but cannot result in a recognized loss.
a. True
b. False
ANSWER: False
RATIONALE: A recognized gain will result if the insurance proceeds exceed the adjusted basis of the
property. A recognized loss can result if the insurance proceeds are less than the adjusted
basis of the property.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Reporting
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
12. If the amount of a corporate distribution is less than the amount of the corporate earnings and profits, the return of
capital concept does not apply and the shareholders’ adjusted basis for the stock remains unchanged.
a. True
b. False
ANSWER: True
RATIONALE: The distribution to a shareholder in this situation is classified as dividend income.
Copyright Cengage Learning. Powered by Cognero. Page 5
Chapter 07: Basis, Gain and Loss, and Nontaxable Exchanges
13. Reggie owns all the stock of Amethyst, Inc. (adjusted basis of $100,000). If he receives a distribution from Amethyst
of $90,000 and corporate earnings and profits are $15,000, Reggie has a capital gain of $5,000 and an adjusted basis for
his Amethyst stock of $0.
a. True
b. False
ANSWER: False
RATIONALE: The distribution to Reggie is treated as a dividend to the extent of earnings and profits
($15,000). The return of capital concept applies to any excess of the amount of the
distribution over the corporation’s earnings and profits. As Amethyst’s earnings and profits
are $15,000, the return of capital concept applies to $75,000 of the $90,000 distribution.
The return of capital part of the distribution of $75,000 ($90,000 – $15,000) is less than
Reggie’s adjusted basis of $100,000. Consequently, his recognized gain is $0 and his
adjusted basis for the stock is reduced to $25,000 ($100,000 – $75,000). There is no capital
gain because the portion of the distribution which represented a return of capital did not
exceed Reggie's basis in the Amethyst stock.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: EOTX.SWFT.LO: 7-01 - LO: 7-01
NATIONAL STANDARDS: United States - BUSPORG: Comprehension - BUSPORG:Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Application
OTHER: Time: 5 min.
DATE CREATED: 11/28/2016 3:34 PM
DATE MODIFIED: 5/17/2017 7:06 PM
14. The amount of a corporate distribution qualifying for capital recovery treatment which exceeds the shareholder-
recipient’s basis in the stock investment is treated as a capital gain.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 6
Another random document with
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dans leur cerveau des zones nouvelles, empiéter de plus en plus sur
l’obscure région de l’instinct.
Nous devenons conscients de plus de choses autour de nous et
de plus de choses en nous.
Dans une nouvelle étape, cette conscience de l’univers
deviendra plus sensible. Elle nous aidera à compatir. Ainsi, jadis,
nous eussions ignoré une catastrophe lointaine. Aujourd’hui, nous la
connaissons, mais elle ne nous émeut pas. Plus tard, elle nous
touchera comme nous touche actuellement une catastrophe toute
proche.
De la Fidélité.
La bravoure.
La vraie bravoure, dans un monde conscient que nous devons
tous travailler à construire, ce sera d’exposer sa vie pour un effet
utile.
Actuellement on trouve brave celui qui expose sa vie, tout court.
On n’examine pas s’il l’expose par ostentation pour éblouir des
témoins, pour leur montrer qu’il n’a pas peur de la mort ni du danger.
On n’examine pas s’il l’expose dans une impulsion pour un effet
futile, qui ne vaut pas son sacrifice.
A la vue de ces actes irréfléchis, s’éveille et applaudit en nous un
très vieil instinct qui nous pousse à admirer le mépris de la mort, le
dédain de la vie.
On dira que ce vieil instinct contient en germe l’altruisme,
puisqu’il nous fait admirer l’homme qui sauve son semblable. J’en
doute. Car on admire aussi l’homme qui risque sa vie pour un tour
de force, pour le plus stupide pari, où nulle existence n’est à sauver.
Ainsi que nos autres sentiments — plus même que beaucoup de
nos sentiments — la bravoure demande à être contrôlée, pour
devenir consciente, cesser d’être parfois un jeu de vanité, pour
s’exercer utilement, noblement, humainement.
La mort.
Religion.
N’est-ce pas une foi, de croire à une justice plus juste, à une
liberté plus libre, à une vie meilleure sur la terre ?
L’altruisme.
Solidarité.
On ne met pas assez les enfants devant cette réalité que, nés
sur un sol, en un temps donné, ils doivent accepter les obligations
de la vie sociale telle qu’elle est régie sur ce sol et en ce temps. De
ce fait, ils ont contracté une sorte d’engagement, touchant les
impôts, les charges, les lois.
C’est là du patriotisme pacifique. C’est aussi un aspect de la
solidarité. Nous devons beaucoup à ceux qui nous ont précédés.
Tout objet dont nous nous servons est le résultat d’une longue suite
d’efforts. Nos vêtements, nos trains, notre téléphone, nous trouvons
tout cela sous notre main, nous jugeons tout naturel de nous en
servir. Mais tout cela nous le devons à ceux qui sont morts. Voilà ce
qui rend les générations solidaires.
[2] Les notes qui composent cet Essai ont été réunies
de 1903 à 1914. Celles qui concernent l’idée de Patrie
datent du printemps 1914. Je n’ai rien à y changer.
J’aurais trop à y ajouter.