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Updated: Sep 08, 2025
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1. Doris and Lydia are equal partners in the capital and profits of Agee & Nolan, but are otherwise unrelated.
The following information pertains to 300 shares of Mast Corp. stock sold by Lydia to Agee & Nolan:
The amount of long-term capital loss that Lydia realized in 1988 on the sale of this stock was:
A) $0
B) $3,000
C) $5,000
D) $2,500
2. Which of the following statements is the best definition of real property?
A) Real property is all tangible property including land.
B) Real property is land and everything permanently attached to it.
C) Real property is only land.
D) Real property is land and intangible property in realized form.
3. John and Mary were divorced in 1991. The divorce decree provides that John pay alimony of $10,000 per
year, to be reduced by 20% on their child's 18th birthday. During 1992, John paid $7,000 directly to Mary
and $3,000 to Spring College for Mary's tuition. What amount of these payments should be reported as
income in Mary's 1992 income tax return?
A) $5,600
B) $8,600
C) $10,000
D) $8,000
4. Allen owns 100 shares of Prime Corp., a publicly-traded company, which Allen purchased on January 1,
2 001, for $10,000. On January 1, 2003, Prime declared a 2-for-1 stock split when the fair market value
(FMV) of the stock was $120 per share. Immediately following the split, the FMV of Prime stock was $62
per share. On February 1, 2003, Allen had his broker specifically sell the 100 shares of Prime stock
received in the split when the FMV of the stock was $65 per share. What amount should Allen recognize
as long-term capital gain income on his Form 1040, U.S. Individual Income Tax Return, for 2003?
A) $1,500
B) $750
C) $2,000
D) $300
5. Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of
college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of
accumulated interest on these bonds is that the:
A) Bonds must be bought by a parent (or both parents) and put in the name of the dependent child.
B) Bonds must be bought by the owner of the bonds before the owner reaches the age of 24.
C) Bonds must be transferred to the college for redemption by the college rather than by the owner of the
bonds.
D) Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).
Solutions:
Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: D | Question # 4 Answer: A | Question # 5 Answer: D |
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