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8)Your friend JJ purchased a property for development. The property had a cost basis of $5,000,000, JJ paid $1,250,000 cash, the remaining $3,750,000 financed via non-recourse mortgage. Unfortunately, the development was a flop and JJ couldnt meet the mortgage payment. At the time of default, the mortgage had a balance of $6,500,000 due to refinancing. The accumulated depreciation was $650,000 fair market value at the time of foreclosure was $6,000,000. What is the gain or loss on foreclosure?

	A.	Gain of $2,150,000
	B.	Gain of $5,950,000
	C.	Loss of $650,000
	D.	None of the other responses.
	E.	Gain of $5,350,000

10) Which of the following statements is correct?

	A.	Mike, who is a handy man, received concert tickets for doing repairs. The tickets had a FMV of $250 and a face value of $125. Mike included $125 in gross income.
	B.	Jenny won a car on the Price is Right. The retail price of the car is $35,000. Jenny included $35,000 in her gross income.
	C.	John is 12 years old and the son of Tom and Ida. Unfortunately, John was very sick and spent over 270 days in a hospital. Tom and Ida cannot claim John because more than half of the year, John was in a hospital and not at home.
	D.	Paul earned $500 in municipal bond interest. He excluded this income from taxable income.
	E.	B and D only.

12) Emily was starting a new business. She purchased a used truck for $30,150. The cost to ship the truck was $925. She had the car detailed and painted with her logo on it for $1,250. Shortly after purchasing the vehicle, the truck needed brakes and tune-up. The cost of the brakes and tune-up were $650 and $200, respectively. What is Emily's cost basis for the truck?

	A.	32,325
	B.	30,150
	C.	30,800
	D.	33,175
	E.	31,400

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