Exam 9: Acquisitions of Property

The general rule for determining the basis of inherited property is that the basis in the hands of the heir is its fair market value at the date of death or at the alternative valuation date.

Robert receives a car as a gift from his mother.The car's purchase price was $20,000,and it was used personally prior to the gift.Robert uses the car 80% of the time in his pizza business.The car's value at the date of the gift is $9,000.What is Robert's basis in the car for depreciation purposes?

Phyllis purchased an automobile for $3,000 down and a note for $15,000.During the year she paid interest of $1,000.Her basis is $18,000.

Randall is given five acres of land in 2001.At the time of the gift,the land had a fair market value of $182,000,and its adjusted basis to the donor was $160,000.What is Randall's gain if he sells the land for $184,000?

Sanford gives Mitchell 100 shares of stock that cost Sanford $5,000 several years ago.On the date of the gift,the stock is valued at $3,000.Mitchell holds the stock until the value increases and sells it for $4,000.What is Mitchell's recognized gain or loss on the sale?

Melonie purchased 100 shares of Wake Corporation stock for $6 per share on August 3,2011.On December 18,2012,Melonie sells all 100 shares for $4 per share.On January 5,2013,Melonie purchases 50 shares of Wake stock for $5 per share.What is the basis of the 50 shares Melonie holds on January 5,2013?

Brad,an engineering consultant,was given stock valued at $3,000 for services rendered.His basis in the stock he received for the services is zero since he received no cash.

Match each statement with the correct term below. -Personalty

Match each statement with the correct term below. -Personal use property

Determine the proper classification(s)of the asset discussed in the following scenario: Judge Marshall purchased a new gold-trimmed gavel to decorate his living room. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.

Gordon is the sole shareholder of Whitman Corporation,an S corporation.At the beginning of the year,Gordon's basis in his Whitman stock is $100,000.During the year,Whitman Corporation has operating income of $50,000; dividends from domestic corporations of $15,000; tax-exempt interest of $5,000; nontaxable life insurance proceeds of $10,000 on the death of a key employee; and a capital loss of $15,000.Whitman pays no dividends.What is Gordon's year-end basis in Whitman stock (after the distribution)?

Tien purchases an office building for $400,000,paying a $75,000 cash down payment and borrowing $325,000 from Atlantic Meridian Mortgage Co.The purchase price is properly allocated 90% to the building and 10% to the land.Two years after the purchase,Tien remodeled one floor of the building at a cost of $25,000.Annual maintenance costs and property taxes total $4,000.A total depreciation of $36,000 is deducted over the 3 years.Determine the adjusted basis of the building and the land as of the end of year 3:

General Telelpnone gave Wynonna $2,000 for an easement for power lines across her property.She must realize the gain or loss on the receipt of cash.

Intangible property lacks a physical existence; the rights exist only because of economic rights the property possesses.

Marjorie starts a new consulting business out of her home.She converts her personal computer,which cost $3,400,to business use when it is worth $1,200.Which of the following is correct? I.The initial basis for determining a gain on the sale of the computer is $1,200. II.The basis for depreciation purposes is $1,200.

Determine the proper classification(s)of a house owned and used by Rhonda as her insurance agency office. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.

Morrison received a gift of income-producing property with an adjusted basis of $50,000 to the donor and a fair market value of $40,000 on the date of the gift (December 31,2013).The donor paid a gift tax of $1,000.Morrison sells the property on September 17,2013 for $45,000.What is the gain or loss on the property?

Match each statement with the correct term below. -Mixed-use property

Determine the proper classification(s)of the asset discussed in the following scenario: Jack bought a new table saw for his home. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.

Lydia purchased a sapphire bracelet for $3,000 while vacationing in Hong Kong during 2001.Lydia gives the bracelet to her daughter Amy when she graduates from college in 2013.The bracelet is appraised at $8,000 on that date.In October 2013,Amy sells the bracelet for $9,000.How is Amy's holding period for the bracelet determined?