In 1985,Thalia Purchases Land for $900,000 and Lists Title in the Names

question 95

Multiple Choice

In 1985,Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa,joint tenants with right of survivorship." In 1990,April and Theresa purchase an apartment building for $1 million as equal tenants in common;April furnished $400,000 and Theresa furnished $600,000 of the cost.In the current year,April dies first in 2009 when the land is worth $1.5 million and the apartment building is worth $2 million.One of the results of these transactions is:

• A)April made a gift to Theresa of $100,000 in 1990.
• B)None of the land is included in April's gross estate.
• C)April's gross estate includes $800,000 (40% * $2 million)as to the apartment building.
• D)April's gross estate includes $1,750,000 as to these properties.
• E)None of the above.

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Definitions:

Worksheet

A document used by accountants to organize various financial statements and supporting details during an accounting cycle.

Net Income

The total revenue of a business minus total expenses, indicating the company's profit after all expense deductions.

Income Statement

A financial statement that reports a company's revenues and expenses over a specific period, showing the net profit or loss.

Adjustments Column

Part of an accounting worksheet where entries are made to update account balances before preparing financial statements.