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

Byron,who lived in New Hampshire,acquired a personal residence ten years ago when he was 52 years old.During this period he has occupied the residence for only eight months (out of 12) each year due to winter vacations in Florida.Is Byron eligible for exclusion of gain under § 121?

Ralph gives his daughter,Angela,stock (basis of $8,000;fair market value of $6,000).No gift tax results.If Angela subsequently sells the stock for $10,000,what is her recognized gain or loss?

If insurance proceeds are received for property used in a trade or business,a casualty transaction can result in recognized gain,but cannot result in a recognized loss.

Eric and Faye,who are married,jointly own a house in which they have resided for the past 17 years.They sell the house for $375,000 with realtor's fees of $10,000.Their adjusted basis for the house is $80,000.Since they are in their retirement years,they plan on moving around the country and renting.What is their recognized gain on the sale of the residence if they use the § 121 exclusion (exclusion of gain on sale of principal residence) and if they elect to forgo the § 121 exclusion? ​ With exclusion Elect to forgo

For a corporate distribution of cash or other property to a shareholder,when does dividend income or a return of capital result?

Marsha transfers her personal use automobile to her business (a sole proprietorship).The car's adjusted basis is $30,000 and the fair market value is $16,000.No cost recovery had been deducted by Marsha,since she held the car for personal use.Determine the adjusted basis of the car to Marsha's sole proprietorship including the basis for cost recovery.

Liz,age 55,sells her principal residence for $600,000.She purchased it twenty-two years ago for $175,000.Selling expenses are $30,000 and repair expenses to get the house in a marketable condition to sell are $15,000.Liz's objective is to minimize the taxes she must pay associated with the sale.Calculate her recognized gain.

If a taxpayer exchanges like-kind property under § 1031 and assumes a liability associated with the property received,the taxpayer is considered to have received boot in the transaction.

On February 2,2015,Karin purchases real estate for $375,000.The annual property taxes of $5,000 are payable on December 31.Realizing that she will pay the property taxes for the entire year,Karin remits $374,575 to the seller at closing.Karin's adjusted basis for the real estate is:

Kevin purchased 5,000 shares of Purple Corporation stock at $10 per share.Two years later,he receives a 5% common stock dividend.At that time,the common stock of Purple Corporation had a fair market value of $12.50 per share.What is the basis of the Purple Corporation stock,the per share basis,and gain recognized upon receipt of the common stock dividend?

Chaney exchanges a truck used in her business for making deliveries for a smaller more fuel-efficient truck to be used in her business for making deliveries.The adjusted basis for her truck is $32,000.The smaller truck has a fair market value of $33,000.In addition,Chaney receives cash of $4,000. a.Calculate Chaney's realized and recognized gain or loss. b.Calculate Chaney's basis for the assets she received.

How does the replacement time period differ for the condemnation of real property used in a trade or business or held for investment when compared with that for other involuntary conversions?

Sidney,a calendar year taxpayer,owns a building (adjusted basis $450,000) in Columbus,OH,in which he conducts his retail computer sales business.The building is destroyed by fire on December 12,2015,and two weeks later he receives insurance proceeds of $600,000.Due to family ties,Sidney decides to move to Columbia,SC.He reinvests all of the insurance proceeds in a building in Columbia where he opens a retail computer sales business on April 2,2016.By electing § 1033,Sidney has no recognized gain and a basis in the new building of $450,000 ($600,000 cost - $150,000 postponed gain).

Marge purchases the Kentwood Krackers,a AAA level baseball team,for $1.5 million.The appraised values of the identified assets are as follows: Prepaid season tickets $150,000 Stadium lease 400,000 Player contracts 500,000 Equipment 100,000 The Krackers have won the pennant for the past two years.Determine Marge's adjusted basis for the assets of the Kentwood Krackers.

If property that has been converted from personal use to business use has appreciated in value,its basis for gain will be the same as the basis for loss.

Carlos,who is single,sells his personal residence on November 5,2015,for $400,000.His adjusted basis was $125,000.He pays realtor's commissions of $20,000.He owned and occupied the residence for 12 years.Having decided that he no longer wants the burdens of home ownership,he invests the sales proceeds in a mutual fund and enters into a 1-year lease on an apartment.The detriments of renting,including a crying child next door,cause Carlos to rethink his decision.Therefore,he purchases another residence on November 6,2016,for $275,000.Is Carlos eligible for exclusion of gain treatment under § 121 (exclusion of gain on sale of principal residence)? Calculate Carlos's recognized gain and his basis for the new residence.

If the recognized gain on an involuntary conversion equals the realized gain because of a reinvestment deficiency,the basis of the replacement property will be more than its cost (cost plus realized gain).

For nontaxable stock rights where the fair market value of the rights is 15% or more of the fair market value of the stock,the taxpayer is required to allocate a portion of the stock basis to the stock rights.

Transactions between related parties that result in disallowed losses might later provide a tax benefit to the related party buyer.

Lump-sum purchases of land and a building are allocated on the basis of the relative fair market values of the individual assets acquired.