Final answer:
The statement regarding the functional use test is false because property replacement typically follows like-kind standards in tax law, not functional use. Similarly, the claim about proprietary colonies is false as proprietors had several responsibilities beyond profit collection.
Step-by-step explanation:
To satisfy the functional use test, replacement property must be used by the owner-investor in a similar endeavor as the property it is replacing. This statement is False. The “functional use test” is generally not a recognized standard in business or tax law when it comes to the replacement of property. Usually, underlying tax rules, such as those for a 1031 exchange in the United States, require that the replacement property be of like-kind, which focuses on the nature and character of the property rather than its functional use.
In the context of proprietary colonies, the statement that Proprietors have no responsibilities except to collect profits is also False. Proprietors in such colonies had administrative duties and were responsible for the governance and development of their colonies, as well as for protecting the rights of the colonists and maintaining the colony's overall welfare.