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

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.

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.

Alice owns land with an adjusted basis of $610,000,subject to a mortgage of $350,000.Real estate taxes are $9,000 per calendar year and are payable on December 31.On April 1,2014,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?

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.

If the buyer assumes the seller's liability on the property acquired,the seller's amount realized is decreased by the amount of the liability assumed.

Hilary receives $10,000 for a 15-foot wide utility easement along one of the boundaries to her property.The easement provides that no structure can be built on that portion of the property.Her adjusted basis for the property is $200,000 and the easement covers 15% of the total acreage.Determine the effect of the $10,000 payment on Hilary's gross income and her basis for the property.

51. Albert purchased a tract of land for $140,000 in 2011 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 2014 and the value of the land fell to $100,000. What is the amount of loss Albert can claim in 2014?

Purchased goodwill is assigned a basis equal to cost,which is calculated using the residual method associated with the purchase of a business.

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.

Arthur owns a tract of undeveloped land (adjusted basis of $145,000)which he sells to his son,Ned,for its fair market value of $105,000.What is Arthur's recognized gain or loss and Ned's basis in the land?

On September 18,2014,Jerry received land and a building from Ted as a gift.Ted had purchased the land and building on March 5,2011,and his adjusted basis and the fair market value at the date of the gift were as follows: Ted paid no gift tax on the transfer to Jerry. a.Determine Jerry's adjusted basis and holding period for the land and building. b.Assume instead that the FMV of the land was $89,000 and the FMV of the building was $60,000.Determine Jerry's adjusted basis and holding period for the land and building.

Gift property (disregarding any adjustment for gift tax paid by the donor):

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

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.

Morgan owned a convertible that he had purchased two years ago for $46,000 and which he transfers to his sole proprietorship.How is the sole proprietorship's basis for the car calculated? What additional information does Morgan need?

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

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

What is the general formula for calculating the adjusted basis of property?

Taylor inherited 100 acres of land on the death of his father in 2014.A Federal estate tax return was filed and this land was valued therein at $650,000,its fair market value at the date of the father's death.The father had originally acquired the land in 1968 for $112,000 and prior to his death he had expended $20,000 on permanent improvements.Determine Taylor's holding period for 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.