Fact Pattern 33-1B

question 13

Multiple Choice

Fact Pattern 33-1B
Eppie hires Franz to do some remodeling work in her office.Eppie does not have the right to control the details of Franz's performance.
-Refer to Fact Pattern 33-1B.The relationship be?tween Eppie and Franz is

• A)client and independent contractor.
• B)employer and employee.
• C)master and servant.
• D)principal and agent.

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Definitions:

FMV

Fair Market Value (FMV) is the estimated price that an asset would sell for on the open market between a willing buyer and a willing seller.

Basis

The initial cost of an asset, adjusted for factors such as depreciation or improvements, used to calculate capital gains or losses for tax purposes.

Debt

Debt represents money borrowed by one party from another under the condition that it is to be repaid, usually with interest.

Basis of Stock

The original value of an asset for tax purposes, usually the purchase price, which is used to calculate capital gains or losses when the stock is sold.