Question 1

Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.

Accepted Answer

One technique to avoid a wash

Question 2

Faith inherits an undivided interest in a parcel of land from her father on February 15,2015.Her father purchased the land on August 25,1988 and his basis for the land was $325,000.The fair market value of the land is $12,500,000 on the date of her father's death and is $11,000,000 six months later.The executor elects the alternate valuation date.Faith has nine brothers and sisters and each inherited a one-tenth interest.
a.​
What is Faith's adjusted basis for her one-tenth undivided interest in the land?
b.What is her holding period for the land?

Accepted Answer

a.Faith's adjusted basis is $1,100,000 (

Question 3

In 1973,Fran received a birthday gift of stock worth $75,000 from her aunt.The aunt had owned the stock (adjusted basis $50,000) for 10 years and paid gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000) or $75,000.

Accepted Answer

A) True 
 B)False

Question 4

Tara owns common stock in Taupe,Inc. ,with an adjusted basis of $250,000.She receives a preferred stock dividend which is nontaxable.
a.What effect does the preferred stock dividend have on Tara's adjusted basis of the common stock?
b.How is the basis of the preferred stock calculated?
c.What effect does the preferred stock dividend have on Tara's gross income?

Accepted Answer

​
 a.Part of the adjusted basis of the c

Question 5

Which of the following is correct?

Accepted Answer

A) The gain basis for property received by gift is the lesser of the donor's adjusted basis or the fair market value on the date of the gift. 
B) The loss basis for property received by gift is the same as the donor's basis. 
C) The gain basis for inherited property is the same as the decedent's basis. 
D) The loss basis for inherited property is the lesser of the decedent's basis or the fair market value on the date of the decedent's death. 
E) None of the above. 
A) The gain basis for property received by gift is the lesser of the donor's adjusted basis or the fair market value on the date of the gift. 
B) The loss basis for property received by gift is the same as the donor's basis. 
C) The gain basis for inherited property is the same as the decedent's basis. 
D) The loss basis for inherited property is the lesser of the decedent's basis or the fair market value on the date of the decedent's death. 
E) None of the above.

Question 6

Fran was transferred from Phoenix to Atlanta.She sold her Phoenix residence (adjusted basis of $250,000) for a realized loss of $50,000 and purchased a new residence in Atlanta for $375,000.Fran had owned and lived in the Phoenix residence for 6 years.What is Fran's recognized gain or loss on the sale of the Phoenix residence and her basis for the residence in Atlanta?

Accepted Answer

A) $0 and $375,000. 
B) $0 and $425,000. 
C) ($50,000) and $325,000. 
D) ($50,000) and $375,000. 
E) None of the above. 
A) $0 and $375,000. 
B) $0 and $425,000. 
C) ($50,000) and $325,000. 
D) ($50,000) and $375,000. 
E) None of the above.

Question 7

Discuss the application of holding period rules to property acquired by gift and inheritance.

Accepted Answer

The holding period for inherited propert

Question 8

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Accepted Answer

In this circumstance,the easiest way for

Question 9

Paula inherits a home on July 1,2015 that had a basis in the hands of the decedent at death of $290,000 and a fair market value of $500,000 at the date of the decedent's death.She decides to sell her old principal residence,which she has owned and occupied for 9 years,with an adjusted basis of $125,000 and move into the inherited home.On September 16,2015,she sells the old residence for $600,000.Paula incurs selling expenses of $30,000 and legal fees of $2,000.She decides to add a pool,deck,pool house,and recreation room to the inherited home at a cost of $100,000.These additions are completed and paid for on November 1,2015.What is her recognized gain on the sale of her old principal residence and her basis in the inherited home?

Accepted Answer

A) $0;$500,000. 
B) $193,000;$600,000. 
C) $443,000;$600,000. 
D) $475,000;$600,000. 
E) None of the above. 
A) $0;$500,000. 
B) $193,000;$600,000. 
C) $443,000;$600,000. 
D) $475,000;$600,000. 
E) None of the above.

Question 10

Which of the following statements is false?

Accepted Answer

A) A realized gain that is never recognized results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
B) A realized gain on which recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
C) A realized loss that is never recognized results in the permanent recovery of less than the taxpayer's cost or other basis for tax purposes. 
D) A realized loss on which recognition is postponed results in the temporary recovery of less than the taxpayer's cost or other basis for tax purposes. 
E) All of the above. 
A) A realized gain that is never recognized results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
B) A realized gain on which recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis for tax purposes. 
C) A realized loss that is never recognized results in the permanent recovery of less than the taxpayer's cost or other basis for tax purposes. 
D) A realized loss on which recognition is postponed results in the temporary recovery of less than the taxpayer's cost or other basis for tax purposes. 
E) All of the above.

Question 11

Monroe's delivery truck is damaged in an accident.Monroe's adjusted basis for the delivery truck prior to the accident is $20,000.If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000,his adjusted basis for the delivery truck after the accident is $21,000.

Accepted Answer

A) True 
 B)False

Question 12

Noelle received dining room furniture as a gift from her friend,Jane.Jane's adjusted basis was $9,200 and the fair market value on the date of the gift was $7,000.Noelle decided she did not need the furniture and sold it to a neighbor six months later for $6,500.What is her recognized gain or loss?

Accepted Answer

A) $0 
B) ($500) 
C) ($2,700) 
D) $6,500 
E) None of the above 
A) $0 
B) ($500) 
C) ($2,700) 
D) $6,500 
E) None of the above

Question 13

The basis of boot received in a like-kind exchange is its fair market value,unless the realized gain is a smaller amount.

Accepted Answer

A) True 
 B)False

Question 14

The amount of the loss basis of a gift will differ from the amount of the gain basis only if at the date of the gift the adjusted basis of the property exceeds the property's fair market value.

Accepted Answer

A) True 
 B)False

Question 15

Parker bought a brand new Ferrari on January 1,2015,for $125,000.Parker was fatally injured in an auto accident on June 23,2015,when the fair market value of the car was $105,000.Parker was driving a loaner car from the Ferrari dealership while his car was being serviced.In his will,Parker left the Ferrari to his best friend,Ryan.Ryan's holding period for the Ferrari begins on January 1,2015.

Accepted Answer

A) True 
 B)False

Question 16

A taxpayer whose principal residence is destroyed in a fire can use both the § 121 (sale of residence gain exclusion) and the § 1033 (involuntary conversion postponement of gain) provisions.

Accepted Answer

A) True 
 B)False

Question 17

The basis of property acquired in a wash sale is its cost plus the loss not recognized on the wash sale.

Accepted Answer

A) True 
 B)False

Question 18

Abby sells real property for $300,000.The buyer pays $5,000 in property taxes that had accrued during the year while the property was still legally owned by Abby.In addition,Abby pays $15,000 in commissions and $3,000 in legal fees in connection with the sale.How much does Abby realize (the amount realized) from the sale of her property?

Accepted Answer

A) $277,000 
B) $282,000 
C) $287,000 
D) $300,000 
E) None of the above 
A) $277,000 
B) $282,000 
C) $287,000 
D) $300,000 
E) None of the above

Question 19

Ross lives in a house he received as a gift from his father.His father had lived in the house for 12 years.The adjusted basis of the house to his father was $160,000 and the fair market value at the time of the gift was $140,000.Ross sells this residence after living in it for 18 months for $150,000 and purchases a new home for $125,000.He incurs selling expenses of $7,000.What is Ross' recognized gain or loss and basis for the new residence?

Accepted Answer

A) ($17,000);$125,000. 
B) ($17,000);$142,000. 
C) $3,000;$125,000. 
D) $3,000;$128,000. 
E) None of the above. 
A) ($17,000);$125,000. 
B) ($17,000);$142,000. 
C) $3,000;$125,000. 
D) $3,000;$128,000. 
E) None of the above.

Question 20

Stuart owns land with an adjusted basis of $190,000 and a fair market value of $500,000.If the property is going to be given to Stuart's nephew,Alex,it is preferable for the transfer to be by inheritance rather than by gift.

Accepted Answer

A) True 
 B)False

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

Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.

In 1973,Fran received a birthday gift of stock worth $75,000 from her aunt.The aunt had owned the stock (adjusted basis $50,000) for 10 years and paid gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000) or $75,000.

Which of the following is correct?

Discuss the application of holding period rules to property acquired by gift and inheritance.

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

Which of the following statements is false?

Monroe's delivery truck is damaged in an accident.Monroe's adjusted basis for the delivery truck prior to the accident is $20,000.If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000,his adjusted basis for the delivery truck after the accident is $21,000.

Noelle received dining room furniture as a gift from her friend,Jane.Jane's adjusted basis was $9,200 and the fair market value on the date of the gift was $7,000.Noelle decided she did not need the furniture and sold it to a neighbor six months later for $6,500.What is her recognized gain or loss?

The basis of boot received in a like-kind exchange is its fair market value,unless the realized gain is a smaller amount.

The amount of the loss basis of a gift will differ from the amount of the gain basis only if at the date of the gift the adjusted basis of the property exceeds the property's fair market value.

A taxpayer whose principal residence is destroyed in a fire can use both the § 121 (sale of residence gain exclusion) and the § 1033 (involuntary conversion postponement of gain) provisions.

The basis of property acquired in a wash sale is its cost plus the loss not recognized on the wash sale.

Stuart owns land with an adjusted basis of $190,000 and a fair market value of $500,000.If the property is going to be given to Stuart's nephew,Alex,it is preferable for the transfer to be by inheritance rather than by gift.

An Introduction to Taxation and Understanding the Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

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