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

In 2011,Harold purchased a classic car that he planned to restore for $12,000.However,Harold is too busy to work on the car and he gives it to his daughter Julia in 2015.At this time,the fair market value of the car has declined to $10,000.Harold paid no gift tax on the transaction.Julia completes some of the restoration herself with out-of-pocket costs of $5,000.She later sells the car for $30,000.What is Julia's recognized gain or loss on the sale of the car?

If a taxpayer purchases taxable bonds at a premium,the amortization of the premium is elective.However,if a taxpayer purchases tax-exempt bonds at a premium,the amortization of the premium is mandatory.Explain this difference in the treatment.

Over the past 20 years,Alfred has purchased 380 shares of Green,Inc. ,common stock.His first purchase was in 1994 when he acquired 30 shares for $20 a share.In 1999,Alfred bought 150 shares at $10 a share.In 2014,Alfred acquired 200 shares at $50 a share.Alfred intends to sell 125 shares at $60 per share in the current year (2015).If Alfred's objective is to minimize gain and assuming he can adequately identify the shares to be sold,what is his recognized gain?

Jared,a fiscal year taxpayer with a August 31st year-end,owns an office building (adjusted basis of $800,000) that was destroyed by fire on December 24,2015.If the insurance settlement was $950,000 (received March 1,2016),what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?

What requirements must be satisfied to receive nontaxable exchange treatment under § 1031?

Dennis,a calendar year taxpayer,owns a warehouse (adjusted basis of $190,000) which is destroyed by a tornado in October 2015.He receives insurance proceeds of $250,000 in January 2016.If before 2019,Dennis replaces the warehouse with another warehouse costing at least $250,000,he can elect to postpone the recognition of any realized gain.

Which of the following satisfy the time period requirement for postponement of gain as a § 1033 (nonrecognition of gain from an involuntary conversion) involuntary conversion?

What requirements must be satisfied for a delayed swap to qualify for § 1031 like-kind exchange treatment?

Mary sells her personal use automobile for $20,000.She purchased the car two years ago for $17,000.What is Mary's recognized gain or loss? It increased in value due to its excellent mileage,yet safe design.

When a taxpayer has purchased several lots of stock on different dates at different purchase prices and cannot identify the lot of stock that is being sold,he should use either a weighted average approach or a LIFO approach.

Karen purchased 100 shares of Gold Corporation stock for $11,500 on January 1,2012.In the current tax year (2015),she sells 25 shares of the 100 shares purchased on January 1,2012,for $2,500.Twenty-five days earlier,she had purchased 30 shares for $3,000.What is Karen's recognized gain or loss on the sale of the stock,and what is her basis in the 30 shares purchased 25 days earlier?

Shontelle received a gift of income-producing property with an adjusted basis of $49,000 to the donor and fair market value of $35,000 on the date of gift.No gift tax was paid by the donor.Shontelle subsequently sold the property for $31,000.What is the recognized gain or loss?

Emma gives her personal use automobile (cost of $32,000;fair market value of $12,000) to her son,Louis,on July 3,2015.She has owned the automobile since July 1,2012. a.What is Louis' basis for the car? b.When does his holding period begin?

Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.

At a particular point in time,a taxpayer can have two principal residences for § 121 exclusion purposes.

Sammy exchanges equipment used in his business in a like-kind exchange.The property exchanged is as follows: Property Surrendered Property Received Adj.Basis FMV Adj.Basis FMV ​ Equipment $44,000 $60,000 $50,000 $43,000 ​ Cash $ 5,000 $ 5,000 ​ Liability on equipment $12,000 $12,000 ​ The other party assumes the liability. a.​ What is Sammy's recognized gain or loss? b.What is Sammy's basis for the assets he received?

After 5 years of marriage,Dave and Janet decided to get a divorce.As part of the divorce settlement,Janet transfers to Dave the house she purchased prior to their marriage.Janet's adjusted basis for the house is $230,000 and the fair market value is $410,000 on the date of the transfer.What are the tax consequences to Janet and to Dave as a result of the transfer?

Arthur owns a tract of undeveloped land (adjusted basis of $145,000) which he sells to his son,Ned,for its fair market value of $105,000.What is Arthur's recognized gain or loss and Ned's basis in the land?

Nontaxable stock dividends result in:

Louis owns a condominium in New Orleans which has been his principal residence for 12 years.He wants to be near Lake Ponchartrain since he enjoys water activities.Therefore,he sells the condominium.His original intent was to purchase a house in New Orleans near the lake.However,the cost of such properties far exceeded his sales proceeds.He was able to purchase a house on the lake in Covington,which is located across the causeway.He invested all of his sales proceeds in the Covington house.After two months of commuting over an hour to and from work each day,he decides to rent an efficiency apartment in New Orleans near his office.He spends the weekends and vacations at his home in Covington. a.Does Louis qualify for exclusion of gain under § 121? b.Does his Covington house qualify as his principal residence?