Exam 14: Property Transactions Determination of Gain and Loss and Basic Considerations

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 2000,Alfred bought 150 shares at $10 a share.In 2015,Alfred acquired 200 shares at $50 a share.Alfred intends to sell 125 shares at $60 per share in the current year (2016).If Alfred's objective is to minimize gain and assuming he can adequately identify the shares to be sold,what is his recognized gain?

Elvis owns all of the stock of White Corporation.The accumulated earnings and profits of White Corporation at the beginning of the year are a deficit of $20,000.The current earnings and profits are $30,000.Elvis' basis for his stock is $250,000.He receives a distribution of $300,000 on the last day of the tax year.How much dividend income and/or capital gain should Elvis report?

Since wash sales do not apply to gains,it may be desirable to engage in this type of transaction before the end of the tax year.

Capital recoveries include:

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.

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.

Neal and his wife Faye reside in Texas,a community property state.Their community property consists of real estate (adjusted basis of $800,000;fair market value of $6 million)and personal property (adjusted basis of $390,000;fair market value of $295,000).Neal dies first and leaves his estate to Faye.What is Faye's basis in the property after Neal's death?

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.

The carryover basis to a donee for property received by gift can be an amount greater than the donor's adjusted basis.

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

Monica sells a parcel of land to her son,Elbert,for $90,000.Monica's adjusted basis is $100,000.Three years later,Elbert gives the land to his fiancée,Karen.At that date,the land is worth $104,000.No gift tax is paid.Since Elbert is going to be stationed in the U.S.Army in Germany for 3 years,they do not plan on being married until his tour is completed.Six months after receiving the land,Karen sells it for $110,000.At the same time,Karen sends Elbert a "Dear John" email.Calculate Karen's realized and recognized gain or loss.

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?

Emma gives her personal use automobile (cost of $32,000;fair market value of $12,000)to her son,Louis,on July 3,2016.She has owned the automobile since July 1,2013. a.What is Louis' basis for the car? b.When does his holding period begin?

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 the amount of a corporate distribution is less than the amount of the corporate earnings and profits,the return of capital concept does not apply and the shareholders' adjusted basis for the stock remains unchanged.

Nontaxable stock dividends result in:

If the fair market value of the property on the date of death is greater than on the alternate valuation date,the use of the alternate valuation amount is mandatory.

Tobin inherited 100 acres of land on the death of his father in 2016.A Federal estate tax return was filed and the land was valued at $300,000 (its fair market value at the date of the death).The father had originally acquired the land in 1973 for $19,000 and prior to his death had made permanent improvements of $6,000.What is Tobin's basis in the land?

The amount of a corporate distribution qualifying for capital recovery treatment which exceeds the shareholder-recipient's basis in the stock investment is treated as a capital gain.

The bank forecloses on Lisa's apartment complex.The property had been pledged as security on a nonrecourse mortgage,whose principal amount at the date of foreclosure is $750,000.The adjusted basis of the property is $480,000,and the fair market value is $750,000.What is Lisa's recognized gain or loss?