Question 1

The holding period of property acquired by gift may begin on:

Accepted Answer

A) The date the property was acquired by the donor only. 
B) The date of gift only. 
C) Either the date the property was acquired by the donor or the date of gift. 
D) The last day of the tax year in which the property was originally acquired by the donor. 
E) None of the above. 
A) The date the property was acquired by the donor only. 
B) The date of gift only. 
C) Either the date the property was acquired by the donor or the date of gift. 
D) The last day of the tax year in which the property was originally acquired by the donor. 
E) None of the above.

Question 2

Melody's adjusted basis for 10,000 shares of Cardinal, Inc. common stock is $1,000,000. During the year, she receives a 5% stock dividend that is a nontaxable stock dividend.
a.What is the amount of Melody's gross income?
b.What is Melody's total basis for the stock?
c.What is Melody's basis per share?

Accepted Answer

The answer of Melody's adjusted basis for 10,000 shares of...

Question 3

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?

Accepted Answer

A) $270,000 
B) ($750,000) 
C) $0 
D) ($480,000) 
E) None of the above 
A) $270,000 
B) ($750,000) 
C) $0 
D) ($480,000) 
E) None of the above

Question 4

On January 15 of the current taxable year, Merle sold stock with a cost of $40,000 to his brother Ned for $25,000, its fair market value. On June 21, Ned sold the stock to a friend for $26,000.
a.What are the tax consequences to Merle and Ned?
b.Would Ned recognize any gain if he sold the stock for $41,000?

Accepted Answer

The answer of On January 15 of the current taxable...

Question 5

Alice owns land with an adjusted basis of $610,000, subject to a mortgage of $350,000. On April 1, Alice sells her land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000. What is the amount realized?

Accepted Answer

A) $1,250,000 
B) $1,370,000 
C) $1,720,000 
D) $1,820,000 
E) None of the above 
A) $1,250,000 
B) $1,370,000 
C) $1,720,000 
D) $1,820,000 
E) None of the above

Question 6

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 7

If the alternate valuation date is elected by the executor of the estate, the basis of all of the property included in the decedent's estate becomes the fair market value 6 months after the decedent's death.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

In a casualty or theft, the basis of property involved is reduced by the amount of insurance proceeds received and by any resulting recognized loss.

Accepted Answer

A) True 
 B)False

Question 10

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?

Accepted Answer

A) $800,000 real estate and $295,000 personal property. 
B) $800,000 real estate and $390,000 personal property. 
C) $3,400,000 real estate and $295,000 personal property. 
D) $6,000,000 real estate and $295,000 personal property. 
E) None of the above. 
A) $800,000 real estate and $295,000 personal property. 
B) $800,000 real estate and $390,000 personal property. 
C) $3,400,000 real estate and $295,000 personal property. 
D) $6,000,000 real estate and $295,000 personal property. 
E) None of the above.

Question 11

The adjusted basis for a taxable bond purchased at a premium is reduced if the amortization election is made. The amount of the amortized premium is treated as an interest deduction.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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.

Accepted Answer

A) True 
 B)False

Question 14

Sam and Cheryl, husband and wife, own property jointly. The property has an adjusted basis of $400,000 and a fair market value of $500,000.
a.Discuss the rules for the calculation of the adjusted basis of the property to Sam if he inherits his wife's share of the property and Sam and Cheryl live in a community property state.
b.If they live in a common law state?

Accepted Answer

The answer of Sam and Cheryl, husband and wife, own...

Question 15

What is the difference between the depreciation (or cost recovery) allowed and the depreciation (or cost recovery) allowable and what effect does each have on the adjusted basis of property?

Accepted Answer

Normally, there is no difference between

Question 16

The fair market value of property received in a sale or other disposition is the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.

Accepted Answer

A) True 
 B)False

Question 17

If Wal-Mart stock increases in value during the tax year by $6,000, the amount realized is a positive $6,000.

Accepted Answer

A) True 
 B)False

Question 18

Tobin inherited 100 acres of land on the death of his father in 2017. 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 1974 for $19,000 and prior to his death had made permanent improvements of $6,000. What is Tobin's basis in the land?

Accepted Answer

A) $19,000 
B) $25,000 
C) $300,000 
D) $325,000 
E) None of the above 
A) $19,000 
B) $25,000 
C) $300,000 
D) $325,000 
E) None of the above

Question 19

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 20

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.

Accepted Answer

Elbert's adjusted basis for the land is

The holding period of property acquired by gift may begin on:

Alice owns land with an adjusted basis of $610,000, subject to a mortgage of $350,000. On April 1, Alice sells her land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000. What is the amount realized?

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.

If the alternate valuation date is elected by the executor of the estate, the basis of all of the property included in the decedent's estate becomes the fair market value 6 months after the decedent's death.

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

In a casualty or theft, the basis of property involved is reduced by the amount of insurance proceeds received and by any resulting recognized loss.

The adjusted basis for a taxable bond purchased at a premium is reduced if the amortization election is made. The amount of the amortized premium is treated as an interest deduction.

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

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.

What is the difference between the depreciation (or cost recovery) allowed and the depreciation (or cost recovery) allowable and what effect does each have on the adjusted basis of property?

The fair market value of property received in a sale or other disposition is the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.

If Wal-Mart stock increases in value during the tax year by $6,000, the amount realized is a positive $6,000.

Which of the following is correct?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 14: Property Transactions: Determination of Gain or Loss and Basis Considerations

The holding period of property acquired by gift may begin on:

Alice owns land with an adjusted basis of $610,000, subject to a mortgage of $350,000. On April 1, Alice sells her land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000. What is the amount realized?

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.

If the alternate valuation date is elected by the executor of the estate, the basis of all of the property included in the decedent's estate becomes the fair market value 6 months after the decedent's death.

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

In a casualty or theft, the basis of property involved is reduced by the amount of insurance proceeds received and by any resulting recognized loss.

The adjusted basis for a taxable bond purchased at a premium is reduced if the amortization election is made. The amount of the amortized premium is treated as an interest deduction.

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

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.

What is the difference between the depreciation (or cost recovery) allowed and the depreciation (or cost recovery) allowable and what effect does each have on the adjusted basis of property?

The fair market value of property received in a sale or other disposition is the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.

If Wal-Mart stock increases in value during the tax year by $6,000, the amount realized is a positive $6,000.

Which of the following is correct?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters