Misc. Multiple Choice Questions

Barbara sold 100 shares of STP Company stock to her daughter, Doris, for $7,000. Th e stock originally cost
Barbara $10,000. Doris later sells the stock on the open market for $8,000. Doris recognizes:
a. no gain or loss.
b. a $1,000 gain.
c. a $2,000 gain.
d. a $3,000 loss.
e. a $2,000 loss.

An apartment building owned by Frank was condemned by the state on March 1, 2012. Frank received
the condemnation award on February 1, 2013. What is the last date that Frank can acquire appropriate
replacement property if he wants to qualify for nonrecognition treatment?
a. March 1, 2015
b. March 1, 2016
c. December 31, 2015
d. December 31, 2016
e. February 1, 2016

Which of the following persons is not a “family member” for purposes of the related party rules?
a. Grandparent
b. Sister
c. Son
d. Mother
e. All of the above are family members

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

Several years ago, Jan paid $25,000 for 1,000 shares of stock in ABC. During the current year ABC declares a
two-for-one stock split. Shortly thereafter, Jan sells 500 shares of ABC stock for $18,000. Her recognized gain
on the sale of the 500 shares is:
a. $0.
b. $11,750.
c. $5,500.
d. $9,000.
e. $7,500.

Joel’s main home is destroyed in a tornado in a federally declared a disaster area. Th e insurance company
compensates Joel for his loss in 2013, which produces a $350,000 realized gain. How long does Joel have to
purchase a new principal residence and avoid being taxed on the gain?
a. December 31, 2013
b. December 31, 2014
c. December 31, 2015
d. December 31, 2016
e. December 31, 2017