Exam 9: Acquisitions of Property

Dana purchases an automobile for personal use for $27,000.After using it for three years,Dana converts the automobile to business use when the fair market value is $19,000.After a few months of business use,Dana sells the automobile for $18,000.What is the amount of gain or loss recognized on the sale of the automobile?

Tony died on April 5,2013.As part of his will,he leaves land that he paid $6,000 for in 1993 to his son Philip.On April 5,2013,the land is worth $11,000.However,due to local real estate conditions,the land continues to decline in value.On July 28 it is worth only $10,000; it declines further to $9,000 on October 5 and plunges to $7,000 on December 18. I.In the absence of any special elections,Philip's basis in the land is $6,000. II.If the executor distributes the land to Philip on July 28,Philip's basis in the land will be $10,000.

Harold purchases land and a building by paying cash of $35,000,and assuming the seller's $82,000 mortgage.In addition,Harold pays $3,000 of legal fees related to the purchase.For property tax purposes,the land is valued at $17,000 and the building at $34,000.Harold's basis in the building is

Which of the following is/are adjustment(s)to the basis of property after the initial basis is determined? I.Add the costs of protecting ownership of the property. II.Add the expenditures for painting the company name on the property. III.Subtract the capital recovery resulting from collections for easements. IV.Subtract the capital recovery resulting from depreciation deductions.

Match each statement with the correct term below. -Basis

Determine the year-end adjusted basis of Roberto's 1/2 interest in the Halifax Partnership.At the beginning of the year,Roberto's adjusted basis is $80,000.The net operating profit of the partnership is $90,000.Also,Halifax distributes $15,000 of cash to Roberto.

Match each statement with the correct term below. -Split basis

Sammy buys a 20% interest in Duvall Corporation paying $100,000 cash on January 1,2012.During 2012,Duvall Corporation reports a loss of $60,000 and pays cash dividends to shareholders of $5,000.For 2013,Duvall Corporation has income of $200,000 and pays cash dividends of $40,000.If Duvall Company is organized as an S Corporation,Sammy's basis in the Duvall Corporation stock at the end of 2013 is:

Match each statement with the correct term below. -Alternate valuation date

If the executor of a decedent's estate elects the alternate valuation date and none of the estate's property is sold or distributed,the estate's assets are valued as of how many months after the date of death?

Hector receives a gift of rare books valued at $7,000.The books have an adjusted basis of $11,000 to the donor.Several months later,Hector sells the books to a professional collector for $8,000.What is Hector's gain or (loss)on the sale?

Oscar buys a 10% interest in Britanny Corporation paying $92,000 cash on January 1,2012.During 2012,Britanny Corporation reports a loss of $30,000 and pays cash dividends to shareholders of $10,000.For 2013,Britanny Corporation has a loss of $60,000 and pays cash dividends of $20,000.If Britanny Company is organized as an S Corporation,Oscar's basis in the Britanny Corporation stock at the end of 2013 is:

Hilliard receives a gift of stock from Martha on June 1 of the current year.Martha paid $15,000 for the stock several years ago.Martha pays a gift tax of $400 on the transfer. I.If the fair market value of the stock on June 1 of the current year is $20,000,Hilliard has a basis in the stock of $15,100. II.If the fair market value of the stock on June 1 of the current year is $14,000,and Hilliard sells the stock for $13,000 on June 2 of the current year,Hilliard realizes a loss on the sale of $1,000.

An asset's holding period normally begins on the day after it is acquired and ends on the day of its disposition.

Match each statement with the correct term below. -Realized gain

Kobe receives a gift of rare books valued at $10,000.The books have an adjusted basis of $6,000 to the donor.Several months later,Kobe sells the books to a professional collector for $7,000.What is Kobe' gain or (loss)on the sale?

Sarah purchased a diamond bracelet for $3,000 while vacationing in Hong Kong during 2005.Sarah 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.What is the amount of gain Amy should recognize on the sale?

Match each statement with the correct term below. -Adjusted basis

Determine the proper classification(s)of the asset discussed in the following scenario: Judge Ruiz purchased a new brass-trimmed gavel to use in her courtroom. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property.

On July 3,2013,Cynthia receives a gift of a collection of books valued at $10,000.The books have an adjusted basis of $6,000 to the donor.They had been purchased in 2001.Several months after receiving the gift,Cynthia sells the books to a professional collector for $9,000.How is Cynthia's holding period for the books determined?