FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: Property Transactions: Determination of Gain or Loss and Basis Considerations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

True/False

Review LaterAdd Note

Review Later

Jesse purchases land and an office building for his business for $200,000 with $50,000 being allocated to the land.During the first year,Jesse deducts cost recovery of $3,050.Jesse's adjusted basis for the building at the end of the first year is $146,950 ($150,000 - $3,050).

A) True
B) False

Correct Answer

verified

Show Answer

Question 42

Essay

Review LaterAdd Note

Review Later

How is the donee's basis calculated for the gift of appreciated property for a gift made before 1977? Assume the donor pays gift tax.

Correct Answer

verified

If the gift is made before 1977,the done...

View Answer

Show Answer

Question 43

Essay

Review LaterAdd Note

Emma gives her personal use automobile (cost of $29,000; fair market value of $15,000)to her son,Louis,on July 3,2012.She has owned the automobile since July 1,2009.

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Broker's commissions,legal fees,and points paid by the seller reduce the seller's amount realized.

The basis for gain and loss of personal use property converted to business use is the lower of the adjusted basis or the fair market value on the date of conversion.

The taxpayer owns stock with an adjusted basis of $15,000 and a fair market value of $8,000.If the stock or cash is going to be given to her niece,it is preferable for the taxpayer to sell the stock and give the $8,000 of cash to her niece.The same preference would exist if the recipient were a qualified charitable organization.

Elbert gives stock worth $28,000 (no gift tax resulted)to his friend,Jeff,on June 8,2012.Elbert purchased the stock on September 1,2005,and his adjusted basis is $22,000.Jeff dies on December 8,2013,and bequeaths the stock to Elbert.At that date,the fair market value of the stock is $31,000.

The bank forecloses on Lisa's apartment complex.The property had been pledged as security on a nonrecourse mortgage,whose principal amount at the date of foreclosure is $750,000.The adjusted basis of the property is $480,000,and the fair market value is $750,000.What is Lisa's recognized gain or loss?

Parker bought a brand new Ferrari on January 1,2012,for $125,000.Parker was fatally injured in an auto accident on June 23,2012,when the fair market value of the car was $105,000.Parker was driving a loaner car from the Ferrari dealership while his car was being serviced.In his will,Parker left the Ferrari to his best friend,Ryan.Ryan's holding period for the Ferrari begins on June 23,2012.

Monica sells a parcel of land to her son,Elbert,for $90,000.Monica's adjusted basis is $100,000.Three years later,Elbert gives the land to his fiancée,Karen.At that date,the land is worth $104,000.No gift tax is paid.Since Elbert is going to be stationed in the U.S.Army in Germany for 3 years,they do not plan on being married until his tour is completed.Six months after receiving the land,Karen sells it for $110,000.At the same time,Karen sends Elbert a "Dear John" email.Calculate Karen's realized and recognized gain or loss.

Kevin purchased 5,000 shares of Purple Corporation stock at $10 per share.Two years later,he receives a 5% common stock dividend.At that time,the common stock of Purple Corporation had a fair market value of $12.50 per share.What is the basis of the Purple Corporation stock,the per share basis,and gain recognized upon receipt of the common stock dividend?

The basis of property acquired in a wash sale is its cost plus the loss recognized on the wash sale.

Henrietta and Hollis have been married for 10 years when Hollis dies in a sky-diving accident.Their assets are summarized below. Henrietta and Hollis reside in Wisconsin,a community property state.All of the assets were acquired with community funds and pass to Henrietta.Her basis for each of the assets becomes: Car House Cash from life insurance proceeds

The amount of the loss basis of a gift will differ from the amount of the gain basis only if at the date of the gift the adjusted basis of the property exceeds the property's fair market value.

Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.

Discuss the application of holding period rules to property acquired by gift and inheritance.

Melba gives her niece a drill press to use in her business with a fair market value of $36,000 and a basis in Melba's hands of $41,000.No gift tax was paid.What is the niece's basis for depreciation (cost recovery) ?

On September 18,2012,Jerry received land and a building from Ted as a gift.Ted had purchased the land and building on March 5,2009,and his adjusted basis and the fair market value at the date of the gift were as follows: Ted paid gift tax on the transfer to Jerry of $96,000.

When a taxpayer has purchased several lots of stock on different dates at different purchase prices and cannot identify the lot of stock that is being sold,he should use either a weighted average approach or a LIFO approach.