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

Installment sale reporting applies to gains only.

T purchased the following lots of ZYX Corporation stock: 25 Shares Purchased 4/30/2012 Cost \ 1,800 40 Shares Purchased 5/20/2012 Cost \ 3,000 25 Shares Purchased 9/21/2012 Cost \ 2,000 T sold 70 shares in December, 2012, for $6,300, but was unable to identify specific shares to be sold by certificate number and date of purchase.What was T's adjusted basis in the $30,000 shares sold?

Gain or loss is realized when property other than cash is transferred to a creditor in satisfaction of a debt obligation.

When property is converted from personal to business use, the basis for loss and for depreciation can be no greater than the fair market value at the time of the conversion.

Which condition is not true of a wash sale?

S sold a business microcomputer for $2,000 that she had purchased for $2,500 several months earlier.Assume the depreciation deducted under MACRS on the computer for the actual holding period was $1,795.What is the amount of S's gain recognized on this sale?

N sold a summer cabin to Y for $30,000 in cash and a recreational vehicle.Y had an adjusted basis in the RV of $15,000 at the time of the sale, although its fair market value was $22,000.N had an adjusted basis in the cabin of $44,000.Assume there were no selling costs.What was N's amount realized in the sale?

W sold a residence for $40,000 payable as follows: Cash down payments $\quad$$\quad$$\quad \$ 8,000$ Existing loan assumed by buyer $\quad 20,000$ Promissory note bearing interest at 10 percent, payable to $W$ in two years $\quad$ 12,000 No payments were made on the promissory note during the year of sale.Assuming W's basis is $30,000, how much gain is recognized by W in the year of sale? Ignore selling costs.

Which one of the following is true of selling costs?

Liabilities that reduce the amount realized from a transaction include which of the following?

A taxpayer who owns indistinguishable shares of stock purchased in two or more transactions and who later sells some of the stock must identify the shares sold using the last-in, first-out (LIFO) method.

Which one of the following family members is not related for purposes of nondeductible losses on sales to related parties?

The recipient of a property that is transferred part as a gift and part as a sale acquires a basis in the property that is the lesser of the basis under the gift rules or the purchase (i.e., cost) basis.

The general rule for determining the basis of property acquired from a decedent does not apply to income in respect of a decedent.

The transfer of 20 shares of stock in satisfaction of a liability constitutes a sale or other disposition of the stock, resulting in gain or loss realized.

B purchased a tractor trailer from his mother for its fair market value of $2,100.She had used the trailer exclusively for business purposes.At the time of sale, the mother's basis in the vehicle was $5,500.What is B's recognized gain or loss if he immediately sells the vehicle for $3,200?

F owns land with an adjusted basis of $45,000 and a fair market value of $72,000.Which one of the following is true of a transfer by F to his spouse, G?

G inherited a late model Mercedes Benz from his great-aunt last year.The auto was worth $28,000 when his aunt died, and G sold the auto two months later for $30,000.The aunt had purchased the auto three months before her death for $38,000.How much gain (or loss) does G recognize on this sale?

A businessman purchases three trucks at an auction.Six months later, he sells one of the trucks.He may choose as his basis for this truck either his adjusted basis in the truck or the FMV of the truck on the date of the auction.

The adjusted basis of purchased property is