Sam bought a townhouse in 2005 with 30-year fixed mortgage. He married Ada in2008. The next year, Ada inherited a small condo form her father. They sold the condoimmediately and used proceeds from the condo as down payment to buy a $600,000SFH in Northridge. This SFH became their primary home. Sam rented out thetownhouse for $2,000/month and put rental income in their joint account. Which ofthe following statement regarding ownership is correct?Townhouse is Sam's separate property; condo is Ada's separate property; rental incomebecomes community propertyO Townhouse and rental income are Sam's separate property; condo becomes communitypropertyTownhouse and rental income are Sam's separate property; condo is Ada's separate propertyO Townhouse is Sam's separate property; condo and rental income become communityproperty.

Community property consists of assets that come into the marriage as a gift or inheritance. These…

Answered: O Townhouse and rental income are Sam's…

Business

Accounting

O Townhouse and rental income are Sam's separate property; condo becomes community property

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 61TPC

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Question

Sam bought a townhouse in 2005 with 30-year fixed mortgage. He married Ada in
2008. The next year, Ada inherited a small condo form her father. They sold the condo
immediately and used proceeds from the condo as down payment to buy a $600,000
SFH in Northridge. This SFH became their primary home. Sam rented out the
townhouse for $2,000/month and put rental income in their joint account. Which of
the following statement regarding ownership is correct?
Townhouse is Sam's separate property; condo is Ada's separate property; rental income
becomes community property
O Townhouse and rental income are Sam's separate property; condo becomes community
property
Townhouse and rental income are Sam's separate property; condo is Ada's separate property
O Townhouse is Sam's separate property; condo and rental income become community
property.

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