Stella Purchased Vacant Land in 2010 That She Subdivided for Resale

question 72

Multiple Choice

Stella purchased vacant land in 2010 that she subdivided for resale as lots. All 10 of the lots were sold during 2017. The lots had a tax basis of $12,000 each and sold for $35,000 each. Stella made no substantial improvements to the lots. She acted as her own real estate broker; so there were no sales expenses for selling the lots. Which of the following statements is correct?

• A)Stella must hold the lots for at least 10 years before she is eligible for the special capital gain treatment of § 1237.
• B)The $230,000 gain from the sale of the ten lots is all ordinary income.
• C)All of the $230,000 gain from the sale of the ten lots is long-term capital gain.
• D)To be eligible for the special capital gain treatment of § 1237, Stella must be a real estate dealer.
• E)None of the above.

Explain the concept of laissez-faire and its implications on economic policy.

Recognize the significance of the Employment Act of 1946.

Understand the effects of economic contractions and expansions on government policy and vice versa.

Discuss the challenges and criticisms of fiscal policy as a tool for economic stabilization.

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Definitions:

Resistance

In the context of electricity, it is the opposition that a material offers to the flow of electric current, typically measured in ohms.

Dial Caliper

A precision measuring tool that uses a dial to indicate the distance between its jaws, enabling highly accurate measurements of length, depth, or diameter.

Component's

Pertaining to the individual parts or elements that make up a larger system or assembly.

Inside Size

The interior dimensions of a space or object, often referring to the habitable room or cargo space within a vehicle or any container.