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Exam 13: Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

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Question 41

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Tariq sold certain U.S.Government bonds and State of Oregon bonds at a loss to offset short-term capital gain from a previous transaction.He felt that the U.S.Government and State of Oregon bonds were "good" investments,so he repurchased identical securities within one week.Do these transactions constitute wash sales? If the bond sales resulted in the recognition of gain (rather than loss),would the wash sale provisions prevent the gains from being recognized?

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The wash sale rules apply beca...

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Question 42

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Melody's adjusted basis for 10,000 shares of Cardinal,Inc.common stock is $1,000,000.During the year,she receives a 5% stock dividend that is a nontaxable stock dividend. a.What is the amount of Melody's gross income? b.What is Melody's total basis for the stock? c.What is Melody's basis per share?

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a.Melody has no gross income because the...

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Question 43

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Owen and Polly have been married for five years.Owen sells investment property to Polly for a realized gain of $140,000.Owen's gain of $140,000 is not recognized and Polly's basis for the property she purchased is her cost.

Gene purchased an SUV for $45,000 which he uses 100% for personal purposes.When the SUV is worth $30,000,he contributes it to his business.The gain basis is $45,000,the loss basis is $30,000,and the basis for cost recovery is $45,000.

During 2015,Howard and Mabel,a married couple,decided to sell their residence.The residence has a basis of $162,000 and has been owned and occupied by them for 11 years.The house was sold in May for $395,000 with broker's commissions and other selling expenses being $24,000.They purchased a new residence in June for $400,000.What is the adjusted basis of the new residence?

Purchased goodwill is assigned a basis equal to cost,which is calculated using the residual method associated with the purchase of a business.

If the alternate valuation date is elected by the executor of the estate,the basis of all of the property included in the decedent's estate becomes the fair market value 6 months after the decedent's death.

Ollie owns a personal use car for which he originally paid $48,000.He trades the car in on a sports utility vehicle (SUV) paying the automobile dealer cash of $30,000.If the negotiated price of the SUV is $49,000,what is Ollie's recognized gain or loss and his adjusted basis for the SUV?

Reggie owns all the stock of Amethyst,Inc.(adjusted basis of $100,000).If he receives a distribution from Amethyst of $90,000 and corporate earnings and profits are $15,000,Reggie has a capital gain of $5,000 and an adjusted basis for his Amethyst stock of $0.

Lucinda,a calendar year taxpayer,owned a rental property with an adjusted basis of $312,000 in a major coastal city.Her property was condemned by the city government on October 12,2015.In order to build a convention center,Lucinda eventually received qualified replacement property from the city government on March 9,2016.This new property has a fair market value of $410,000. a.​ What is Lucinda's recognized gain or loss on the condemnation? b.What is her adjusted basis for the new property? c.​ If,instead of receiving qualifying replacement property,Lucinda was paid $410,000,what is the latest date that she can acquire qualifying replacement property?

If the fair market value of the property on the date of death is greater than on the alternate valuation date,the use of the alternate valuation amount is mandatory.

Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4,2015,the date of the decedent's death.The executor distributes the land to Kelly on November 12,2015,at which time the fair market value is $49,000.The fair market value on February 4,2016,is $45,000.In filing the estate tax return,the executor elects the alternate valuation date.Kelly sells the land on June 10,2016,for $48,000.What is her recognized gain or loss?

Jamie bought her house in 2008 for $395,000.Since then,she has deducted $70,000 in depreciation associated with her home office and has spent $45,000 replacing all the old pipes and plumbing.She sells the house on July 1,2015.Her realtor charged $34,700 in commissions.Prior to listing the house with the realtor,she spent $300 advertising in the local newspaper.Sammy buys the house for $500,000 in cash,assumes her mortgage of $194,000,and pays property taxes of $4,200 for the entire year on December 1,2015.What is Jamie's adjusted basis at the date of the sale and the amount realized?

Taylor inherited 100 acres of land on the death of his father in 2015.A Federal estate tax return was filed and this land was valued therein at $650,000,its fair market value at the date of the father's death.The father had originally acquired the land in 1969 for $112,000 and prior to his death he had expended $20,000 on permanent improvements.Determine Taylor's holding period for the land.

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

Capital recoveries include:

Evelyn,a calendar year taxpayer,lists her principal residence with a realtor on February 7,2015,enters into a contract to sell on July 12,2015,and sells (i.e. ,the closing date) the residence on August 1,2015.The realized gain on the sale is $225,000.Which date is the appropriate ending date in determining if the residence has been owned and used by the Evelyn as the principal residence for at least two years during the prior five-year period?

If losses are disallowed in a related party transaction,the holding period for the buyer includes the holding period of the seller.

Ed and Cheryl have been married for 27 years.They own land jointly with a basis of $300,000.Ed dies in 2015,when the fair market value of the land is $500,000.Under the joint ownership arrangement,the land passed to Cheryl. a.​ If Ed and Cheryl reside in a community property state,what is Cheryl's basis in the land? b.If Ed and Cheryl reside in a common law state,what is Cheryl's basis in the land?

Under what circumstance is there recognition of some or all of the realized gain associated with the giving of boot by the taxpayer in a like-kind exchange?