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Question 30 of 75.

All of the following are steps in the judicial foreclosure process EXCEPT: A) The court issues a decree of judgment. B) A notice of sale is published where the property is located. C) A preliminary title search is conducted. D) The court issues a deficiency ruling if the proceeds from the sale were more than the amount of the mortgage.

Question 31 of 75.

Tommy originally sold his home in a seller-financed transaction on October 30, 2016, for $350,000, and he excluded a portion of the gain. The buyer defaulted in August 2020, so he repossessed it on January 10, 2021, when the balance of the note was $340,000. Tommy resold the house for $345,000 on September 22, 2021. Original sale expenses were $7,000. Resale expenses were $6,000. Repossession costs were $8,000. What is the recomputed amount realized? A) $334,000; B) $341,000; C) $345,000; D) $347,000

Question 32 of 75.

Review each option, then choose the response that correctly lists all the items that must be reported by the seller when personal property is repossessed. A) Gain. B) Loss. C) Gain or loss. D) Gain or loss, and the amount of any bad debt.

Question 33 of 75.

After Kassady stopped making the loan payments on her office building, her lender foreclosed on the property. The loan was secured by the building when she purchased it three years ago for $575,000. Kassady received a Form 1099-A indicating that the debt at the time of foreclosure was $530,000, and the fair market value (FMV) of the building was $590,000. Additionally, box 5 was checked. If the building is sold for the FMV, how much of Kassady's personal assets can the lender attempt to collect to satisfy the judgment? A) $0; B) $15,000; C) $45,000; D) $60,000

Question 34 of 75.

Choose the response that correctly completes the next sentence regarding gain recognition on the repossession of qualified real property. Recognized gain on the repossession is limited to: A) The gross profit on the original sale. B) The gross profit on the original sale, minus the total gain already reported, plus the cost of repossession. C) The sale price of the property minus the total gain already reported. D) The sale price of the property plus the total gain already reported, minus the cost of repossession.

Question 35 of 75.

Kim sold her home a few years ago in a seller-financed transaction. She qualified for the principal residence exclusion at the time of the sale, and she was able to exclude the entire amount of her gain. Unfortunately, the transaction did not work out, and she repossessed the property after the buyer defaulted. If Kim later resells the home, which of the following statements regarding the principal residence gain exclusion is TRUE? A) The amount previously excluded must be recaptured and is subject to capital gain tax treatment in the year of resale. B) The exclusion will still apply to the original sale, but under no circumstances can it be used to shelter gain on the repossession or resale. C) The exclusion may apply to all three transactions (the original sale, repossession, and resale), but only if Kim owned and used the property as her principal residence for two of the last five years ending on the date of resale. D) Kim may be eligible to exclude gain on the repossession and the resale as well as the original sale, but only if she resells the home within one year after repossessing it.

Question 36 of 75.

The rules and procedures governing foreclosures by servicers of non-federally backed mortgages are established by the: A) Internal Revenue Code (IRC). B) State in which the mortgage lender is headquartered. C) State where the foreclosed property is located. D) Uniform Commercial Code.

Question 37 of 75.

Which of the following is an example of nonrecourse debt? A) An automobile lease. B) An auto loan for which the car serves as collateral, but the borrower is not personally responsible for the repayment of the debt. C) Any business debt that is secured by collateral. D) A home mortgage where the buyer is personally liable for the debt.

Question 38 of 75.

What is the seller's gain or loss on repossessed personal property with a fair market value of $6,000 on the date of repossession, where the seller's basis is $5,800, and the costs of repossession were $500? A) No gain or loss. B) Loss of $200. C) Loss of $300. D) Gain of $300

Question 39 of 75.

A taxpayer who lost property to foreclosure during the year brings a Form 1099-A to their tax appointment. Box 5 of the form is checked, indicating that the taxpayer was personally responsible for repaying the debt. This informs the tax preparer that the taxpayer: A) Cannot have taxable income associated with this event. B) Cannot have ordinary income from this event, but may have a capital gain. C) Does not need to report the information on their tax return unless they also received a Form 1099-C. D) May have taxable income associated with this event.

Question 40 of 75.

Fawad sold a pickup truck for $19,000 in an installment sale. He reported his gain in full in the year of sale. Two years later, the buyer was in default, and Fawad repossessed the truck. At the time of repossession, the truck had a fair market value of $16,000, the buyer still owed $11,000, and the cost of repossession was $600. What is Fawad's gain or loss on the repossession? A) Loss of $3,600. B) Loss of $3,000. C) Gain of $3,000. D) Gain of $4,400.

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