4. _____ In Commissioner v. Tufts, 461 U.S. 300, 103 S.Ct 1826, the Supreme Cour

Question

4. _____ In Commissioner v. Tufts, 461 U.S. 300, 103 S.Ct 1826, the Supreme Court concluded that when the amount of the non-recourse note assumed by the buyer exceeds the property’s fair market value, the seller excludes the excess from the amount realized on the sale. 5. _____ Prior to their marriage Jack sold Diane 50% interest in his rental property. Jack is not required to recognize gain/loss on the sale since the sale was in contemplation of marriage. 6. _____ Under a divorce decree the ex-spouse must relinquish ownership in an asset to the husband three years after the divorce is final. The husband will assume the basis of the property from the ex-spouse. 7. _____ A loss on the sale of a personal residence is not deductible. 8. _____ When the buyer assumes the seller’s liability on a mortgage, the seller includes the amount of the mortgage in computing the amount realized from the sale. 9. ____ Trade Accounts Receivable are capital assets. 10. _____ A corporation may carry forward capital losses to offset against capital gains indefinitely 11. _____To qualify as Section 1231 property, it must be used in the trade or business and must be held for more than one year. 12. _____ Under IRC Section 165(g) if any security which is a capital asset becomes worthless during the taxable year, the loss shall be treated as a loss from the sale or exchange of a capital asset on the last day of the taxable year. 13. _T____ Business property held for less than or equal to one year always produces ordinary income or loss. 14. _____ The basis of business property is reduced by the greater of the depreciation allowed or allowable. 15. ____ Janice buys property by paying $1,000 down and borrowing $9,000. Janice’s initial basis in the property is $1,000.

Explanation / Answer

Answer:4 False because Seller of the Property must include the entire debt in the amount realized even though the debts exceeds the FMV.

Answer:5 False because he sold their interest before the marriage.

Answer:7 True because Losses from the sale of personal–use property, such as your home or car, are not deductible.

Answer:8 True

Answer:9 False because Any stock in trade, consumable stores, or raw materials held for the purpose of business or profession have been excluded from the definition of capital assets.

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