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

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Question 81

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This year,Fran receives a birthday gift of stock worth $75,000 from her aunt.The aunt has owned the stock (adjusted basis $50,000)for 10 years and pays gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000)or $75,000.

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Question 82

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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.

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Elbert's adjusted basis for the land is ...

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Question 83

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Paul sells property with an adjusted basis of $45,000 to his daughter Dean,for $38,000.Dean subsequently sells the property to her brother,Preston,for $38,000.Three years later,Preston sells the property to Hun,an unrelated party,for $50,000.What is Preston's recognized gain or loss on the sale of the property to Hun?

Nontaxable stock dividends result in:

What is the general formula for calculating the adjusted basis of property?

Molanda sells a parcel of land for $25,000 in cash and the buyer assumes Molanda's mortgage of $20,000 on the land.Molanda's amount realized is $45,000.

Ollie owns a personal use car for which he originally paid $42,000.He trades the car in on a sports utility vehicle (SUV)paying the automobile dealer cash of $24,000.If the negotiated price of the SUV is $45,000,what is Ollie's recognized gain or loss and his adjusted basis for the SUV?

Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4,2012,the date of the decedent's death.The executor distributes the land to Kelly on November 12,2012,at which time the fair market value is $49,000.The fair market value on February 4,2013,is $45,000.In filing the estate tax return,the executor elects the alternate valuation date.Kelly sells the land on June 10,2013,for $48,000.What is her recognized gain or loss?

Albert purchased a tract of land for $140,000 in 2009 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000.Highway engineers surveyed the property and indicated that he would probably get $180,000.The highway project was abandoned in 2012 and the value of the land fell to $100,000.What is the amount of loss Albert can claim in 2012?

Andrew acquires 2,000 shares of Eagle Corporation stock for $100,000 on March 31,2005.On January 1,2012,he sells 125 shares for $5,000.On January 22,2012,he purchases 135 shares of Eagle Corporation stock for $6,075.When does Andrew's holding period begin for the 135 shares?

Samantha gives her son,Steve,stock (basis of $72,000; fair market value of $68,000) and no gift tax results.When Steve subsequently sells the stock for $69,000,his recognized gain or loss is:

The adjusted basis of property that is stolen is reduced by the amount of insurance proceeds received and by any recognized loss.

For a corporate distribution of cash or other property to a shareholder,when does dividend income or a return of capital result?

Cassie purchases a sole proprietorship for $145,000.The fair market value of the tangible assets is $110,000 and the agreed to value of goodwill is $10,000.Assuming there are no other intangible assets,Cassie's basis for the tangible assets is $132,917 ($110,000 + $22,917)and her basis for the goodwill is $12,083 ($10,000 + $2,083).