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

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?

For disallowed losses on related-party transactions,who has the right of offset?

For the loss disallowance provision under § 267,related parties include certain family members,a shareholder and his or her controlled corporation (i.e. ,greater than 50% in value of the corporation's outstanding stock),and a partner and his or her controlled partnership (i.e. ,greater than 50% of the capital interests or profits interest in the partnership).

Ken is considering two options for selling land for which he has an adjusted basis of $100,000 and on which there is a mortgage of $80,000.Under the first option,Ken will sell the land for $225,000 with a stipulation in the sales contract that he liquidate the mortgage before the sale is complete.Under the second option,Ken will sell the land for $145,000 and the buyer will assume the mortgage.Calculate Ken's recognized gain under both options.

Maurice sells his personal use automobile at a realized loss.Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?

Boyd acquired tax-exempt bonds for $430,000 in December 2016.The bonds,which mature in December 2021,have a maturity value of $400,000.Boyd does not make any elections regarding the amortization of the bond premium.Determine the tax consequences to Boyd when he redeems the bonds in December 2021.

Which of the following is correct?

Nat is a salesman for a real estate developer.His employer permits him to purchase a lot for $75,000.The employer's adjusted basis for the lot is $45,000,and its normal selling price is $90,000. What is Nat's recognized gain and his basis for the lot? Recognized gain Basis

Expenditures made for ordinary repairs and maintenance of property are not added to the original basis in the determination of the property's adjusted basis whereas capital expenditures are added to the original basis.

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?

A realized loss whose recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis.

​Alvin is employed by an automobile dealership as its manager.As such,he purchased an SUV for $32,000 (fair market value is $48,000).No other employees are permitted a discount.What is Alvin's basis in the SUV?

Hubert purchases Fran's jewelry store for $950,000.The identifiable assets of the business are as follows: ​ Basis FMV Inventory $ 90,000 $ 97,000 Accounts receivable 55,000 50,000 Building 100,000 225,000 Land 280,000 300,000 Hubert and Fran agree to assign $110,000 to a 7-year covenant not to compete.How should Hubert allocate the $950,000 purchase price to the assets?

Andrew acquires 2,000 shares of Eagle Corporation stock for $100,000 on March 31,2012.On January 1,2016,he sells 125 shares for $5,000.On January 22,2016,he purchases 135 shares of Eagle Corporation stock for $6,075.When does Andrew's holding period begin for the 135 shares?

Albert purchased a tract of land for $140,000 in 2013 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000.Highway engineers surveyed the property and indicated that he would probably get $180,000.The highway project was abandoned in 2016 and the value of the land fell to $100,000.What is the amount of loss Albert can claim in 2016?

If the alternate valuation date is elected by the executor in 2016,the total basis of inherited property will be more than what it would have been if the primary valuation date and amount had been used.

Ollie owns a personal use car for which he originally paid $48,000.He trades the car in on a sports utility vehicle (SUV)paying the automobile dealer cash of $30,000.If the negotiated price of the SUV is $49,000,what is Ollie's recognized gain or loss and his adjusted basis for the SUV?

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

Nancy gives her niece a crane to use in her business with a fair market value of $61,000 and a basis in Nancy's hands of $80,000.No gift tax was paid.What is the niece's basis for depreciation (cost recovery)?

How is the donee's basis calculated for the gift of appreciated property for a gift made before 1977? Assume the donor pays gift tax.