1. Jim, a US individual who qualifies as a real estateprofessional, purchases a certain rental real estate property in2014 and leases it out producing a taxable loss each year from2014-2017. Jim has no other passive income during any of theseyears. He sells the real estate in 2017 at a gain. Jimcan deduct the taxable losses as ordinary deductions generated fromher rental activity in 2017, the year that he sold the rental realestate, and will recognize capital gain income on the sale underSection 1231.
True False
2. Passive losses that are limited on an individual’sincome tax return in one year can be carried forward and deductedin future tax years.
True False
3. When condominiums are sold in the ordinary course ofbusiness by an individual, the income earned from the sale of thecondo will be taxed as the capital gain tax rate.
True False
4. Jane holds land with a tax basis of$100,000, but a fair market value of $500,000 (the land appreciatedover several years). Jane donates the land to a qualifiedcharitable organization. Jane must recognize the $400,000 gain andwill be allowed to take a $500,000 charitable deduction for thevalue of the contribution.
True False
5. The requirements to treat a transaction as anontaxable Section 1031 exchange includes that the property must beheld for investment, for productive use in a trade or business oras dealer property held for sale to customers in the ordinarycourse of a trade or business.
True False
6. When property is inherited, the tax basis carriesover to the heirs.
True False
