Problem 1: Harold purchases land and a building by paying $35,000 cash and assuming the seller's $82,000 mortgage. In addition, Harold pays $3,000 in legal fees related to the purchase. For property tax purposes, the land is valued at $17,000 and the building at $34,000. Harold's basis in the building is:
a. $17,000.
b. $34,000.
c. $40,000.
d. $80,000.
e. $120,000.
Problem 2: In 2007, Charles purchased 1,000 shares of Ryan Corporation stock for $12,000. On February 22, 2019, he sells all the shares for $9,000. On March 15, 2019, he repurchases 1,000 shares of Ryan for $8,000 and holds them until May 29, 2019, when he sells them for $10,000. What is Charles's recognized gain or loss on the May 29, 2019, sale?
a. $1,000 loss
b. $2,000 gain
c. $2,000 loss
d. $1,000 gain
e. No gain (or loss) recognized
Problem 3: Ted purchases some forest land in 2017 with the intention of building a log cabin to use as a vacation home. To obtain the land, Ted pays $10,000 cash, assumes the seller's $19,000 mortgage on the land, and pays $3,000 in commissions and legal fees related to the purchase. In 2018, Ted pays a contractor $4,000 to bulldoze and level the site of the log cabin. In 2019, Ted has a well dug and water and sewer lines laid in the ground at a cost of $6,000. Ted paid $2,000 of property taxes in 2017 and $5,000 of property taxes in 2018 and 2019 on the land. What is Ted's basis in the land at the end of 2019?
a. $54,000
b. $42,000
c. $38,000
d. $36,000
e. $32,000
Problem 4: Bob owns a shipping business. He purchases a label making machine for the store. This item is
a. Real property
b. Intangible property
c. Personal property
d. None of the above
Problem 5: Livia owns a medical consultation business. She also enjoys fall foliage tours on the weekends during which she buys plants to decorate her home. These plants are
a. Real property
b. Tangible property
c. Personal property
d. None of the above
Problem 6: Evelyn bought rights to a recipe for spicy sauce. She makes the sauce, bottles it and sells it to local grocery stores. The legal right to the recipe is
a. Real property
b. Intangible property
c. Personal property
d. None of the above
Problem 7: The bottles Evelyn uses in the manufacturing process are
a. Real property
b. Intangible property
c. Personal property
d. None of the above
Problem 8: Isla runs a sheep farm in Iceland. She recently purchased more land that has a greenhouse on it so she will be able to grow and sell vegetables. The greenhouse is
a. Real property
b. Intangible property
c. Personal property
d. None of the above