Question 1

Shantel owned and lived in a home for five years before marrying Daron.Shantel and Daron lived in the home for two years before selling it at a $700,000 gain.Shantel was the sole owner of the residence until it was sold.How much of the gain may Shantel and Daron exclude?

Accepted Answer

A)  $0.
B)  $250,000.
C)  $500,000.
D)  $700,000.E) A) and B)
F) C) and D)

Question 2

Taxpayers are allowed to deduct real property taxes at the time they pay estimated real property taxes to an escrow account established by the lender for the taxpayer's property taxes.

Accepted Answer

A) True 
 B)False

Question 3

For tax purposes a dwelling unit is a residence if the taxpayer's number of personal-use days of the unit is more than 10 days.

Accepted Answer

A) True 
 B)False

Question 4

Several years ago,Chara acquired a home that she vacationed in part of the time and she rented part of the time.During the current year Chara:
-Personally stayed in the home for 14 days,
-Rented it at full fair market value to her parents for eight days,
-Rented it to her sister for five days at half price,
-Rented it to her friend at a discounted rate for three days,
-Rented it to another friend at fair market value for six days,
-Rented the home to third parties for 42 days at the market rate,
-Did repair and maintenance work for three days to keep the home ready for renters,and
-Marketed the property and made it available for rent for 120 days during the year even though it was not rented during this time.
How many days of personal use and how many days of rental use did Chara experience on the property during the year?

Accepted Answer

30 days personal; 51...

Question 5

A taxpayer can qualify for the home sale exclusion even if she has moved out of the home and is renting the home to another at the time of the sale.

Accepted Answer

A) True 
 B)False

Question 6

When a taxpayer experiences a net loss from a nonresidence (rental property) :

Accepted Answer

A)  the taxpayer will not be allowed to deduct the loss under any circumstance if the taxpayer does not have passive income from other sources.
B)  the loss is fully deductible against the taxpayer's ordinary income no matter the circumstances.
C)  if the taxpayer is not an active participant in the rental,the taxpayer may be allowed to deduct the loss even if the taxpayer does not have any sources of passive income.
D)  if the taxpayer is not allowed to deduct the loss due to the passive activity loss limitations,the loss is suspended and carried forward until the taxpayer generates passive income or until the taxpayer sells the property.E) All of the above
F) A) and C)

Question 7

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

Accepted Answer

A)  All else equal,the break-even point for paying points on an original mortgage is longer than the break-even point for paying points on a refinance.
B)  All else equal,the break-even point for paying points on an original mortgage is longer for a taxpayer who does not make extra principal payments each year on the loan than for a taxpayer who does make additional principal payments each year on the loan.
C)  All else equal,the break-even point for a taxpayer paying points on an original mortgage is longer when the taxpayer's marginal income tax rate increases in the years subsequent to the original financing compared to a taxpayer whose marginal tax rate does not change in the years subsequent to the year in which the loan is executed.
D)  None of the choices are correct.E) B) and C)
F) A) and B)

Question 8

Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-related expenses between rental use and personal use is correct?

Accepted Answer

A)  The Tax Court approach allocates more property tax and interest expense to rental use than does the IRS approach.
B)  The Tax Court and the IRS approaches allocate the same amount of expenses,other than interest expense and property taxes,to rental use.
C)  The IRS approach allocates interest expense and property taxes to rental use based on the ratio of the number of days of rental use to the total days of the year.
D)  None of the choices are correct.E) B) and D)
F) A) and B)

Exam 14: Tax Consequences of Home Ownership

Correct Answer
verified
30 days personal; 51...
View Answer

A taxpayer can qualify for the home sale exclusion even if she has moved out of the home and is renting the home to another at the time of the sale.

Correct Answer
verified

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

Correct Answer
verified

Taxpayers are allowed to deduct real property taxes at the time they pay estimated real property taxes to an escrow account established by the lender for the taxpayer's property taxes.

Correct Answer
verified

Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-related expenses between rental use and personal use is correct?

Correct Answer
verified

For tax purposes a dwelling unit is a residence if the taxpayer's number of personal-use days of the unit is more than 10 days.

Correct Answer
verified

When a taxpayer experiences a net loss from a nonresidence (rental property) :

Correct Answer
verified

Shantel owned and lived in a home for five years before marrying Daron.Shantel and Daron lived in the home for two years before selling it at a $700,000 gain.Shantel was the sole owner of the residence until it was sold.How much of the gain may Shantel and Daron exclude?

Correct Answer
verified

Exam 14: Tax Consequences of Home Ownership

Correct Answerverified30 days personal; 51...View AnswerShow Answer

A taxpayer can qualify for the home sale exclusion even if she has moved out of the home and is renting the home to another at the time of the sale.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

Correct AnswerverifiedShow Answer

Taxpayers are allowed to deduct real property taxes at the time they pay estimated real property taxes to an escrow account established by the lender for the taxpayer's property taxes.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-related expenses between rental use and personal use is correct?

Correct AnswerverifiedShow Answer

For tax purposes a dwelling unit is a residence if the taxpayer's number of personal-use days of the unit is more than 10 days.

Correct AnswerverifiedShow Answer

When a taxpayer experiences a net loss from a nonresidence (rental property) :

Correct AnswerverifiedShow Answer

Shantel owned and lived in a home for five years before marrying Daron.Shantel and Daron lived in the home for two years before selling it at a $700,000 gain.Shantel was the sole owner of the residence until it was sold.How much of the gain may Shantel and Daron exclude?

Correct AnswerverifiedShow Answer

Correct Answer
verified
30 days personal; 51...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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