Final Notes from Review

Question 1

Basis in property purchased

Answer 1

cost out of pocket
+ mortgage (liability)
+ title insurance policy

Question 2

How do removal and clean-up costs affect casualty losses?

Answer 2

Added to the basis from which to determine gain/loss

Question 3

What does the limit of DNI or distribution from a trust determine?

Answer 3

the amount that is either taxable to the trust or the individual
*a distribution could be higher than the taxable amount

Question 4

Items to add to the basis being subtracted out in like-kind exchanges

Answer 4

• boot paid

* liabilities incurred (can be netted against those that are given up)

Question 5

Prevention of Performance is a ___________ with regard to a contract

Answer 5

Breach

Question 6

At risk amount for S Corporation

Answer 6

Basis + DIRECT SHAREHOLDER LOANS

Question 7

How long must small business stock be held?

Answer 7

5 years

Question 8

Two exceptions for Statute of Frauds

Answer 8

1. possible to complete in one year

2. full performance

Question 9

Exemptions to Exclusions for Liens

Answer 9

1. PMSI in personal property
2. Purchase money mortgages against real property
3. IRS claim due to failure to pay federal income taxes

Question 10

Key items that are/are not securities

Answer 10

Are: limited partnership interest
Not: certificates of deposit and general partnership interest