Exam 9: Acquisitions of Property

On June 10,2015,Akira receives a gift of a rare marble statue with a fair market value of $9,000.The marble statue had an adjusted basis of $12,000 to the donor and was purchased in 2014.Akira sells the marble statue July 5,2016,for $8,000.When does Akira's holding period for the rare marble statue begin?

Sarah purchased a diamond bracelet for $3,000 while vacationing in Hong Kong during 2008.Sarah gives the bracelet to her daughter Amy when she graduates from college in 2016.The bracelet is appraised at $8,000 on that date.In October 2016,Amy sells the bracelet for $9,000.What is the amount of gain Amy should recognize on the sale?

Whenever the donor's adjusted basis is used to compute a gain or loss on the donee's disposition of property received by gift,the donee's holding period is always the period of time the property was owned by the donee only.

Ted purchases some forest land in 2014 with the intention of building a log cabin to use as a vacation home.To obtain the land,Ted pays $10,000 cash,assumes the seller's $19,000 mortgage on the land and pays $3,000 in commissions and legal fees related to the purchase.In 2015,Ted pays a contractor $4,000 to bulldoze and level the site of the log cabin.In 2016,Ted has a well dug and water and sewer lines laid in the ground at a cost of $6,000.Ted paid $2,000 of property taxes in 2014 and $5,000 of property taxes in 2015 and 2016 on the land.What is Ted's basis in the land at the end of 2016?

Makemore Company purchases a factory for $800,000.The purchase price is properly allocated 90% to the building and 10% to the land.In the first year,Makemore adds a storage shed to the building at a cost of $8,000.The utility company pays Makemore $1,500 for an easement to run utility lines across the land.A total depreciation of $45,000 is deducted over the 3 years.Determine the adjusted basis of the building and the land as of the end of year 3:

Marjorie starts a new consulting business out of her home.She converts her personal computer,which cost $3,400,to business use when it is worth $1,200.Which of the following is correct? I.The initial basis for determining a gain on the sale of the computer is $1,200. II.The basis for depreciation purposes is $1,200. ​

Adjusted basis is equal to the initial basis,plus or minus the cumulative effects of adjustments.

General Telelpnone gave Wynonna $2,000 for an easement for power lines across her property.She must realize the gain or loss on the receipt of cash.

Tillman is building a warehouse for use in his business.The construction costs include the following: ​ What is Tillman's basis in the warehouse?

The split basis rules for business property prevent the deduction of the disallowed personal loss through depreciation or a loss from the sale of business property.

Match each statement with the correct term below. -Real property

Which of the following is/are adjustment(s)to the basis of property after the initial basis is determined? I.Add the costs of protecting ownership of the property. II.Add the expenditures for painting the company name on the property. III.Subtract the capital recovery resulting from collections for easements. IV.Subtract the capital recovery resulting from depreciation deductions. ​

Reiko buys 200 shares of Saratoga Corporation common stock on December 10,2015,for $2,000.He buys an additional 200 shares for $1,800 on December 23,2016.On December 28,2016,Reiko sells 100 of the first 200 shares for $800.He sells the remaining 300 shares for $2,500 on November 15,2017.What is(are)the amount(s)and the year of recognition of losses that Reiko can recognize? ​ ​

Buffey operates a delivery service.She purchased a van in 2014 for $25,000,and she sold it in 2016 for $15,000.Buffey did not deduct any depreciation on the van from 2014 through 2016,although total allowable depreciation on the van would have been $17,000.What is the amount of Buffey 's recognized gain or loss on the sale of the van?

On February 3 of the current year,Samantha converts her house to a rental property.Samantha's adjusted basis in the house is $150,000 and the fair market value is $120,000 on the date of conversion.Samantha uses the rental for 3 years and properly deducts depreciation totaling $12,000.Then,she sells the house for $130,000.What is the amount of the gain or (loss)recognized on the sale?

Gordon is the sole shareholder of Whitman Corporation,an S corporation.At the beginning of the year,Gordon's basis in his Whitman stock is $100,000.During the year,Whitman Corporation has operating income of $50,000; dividends from domestic corporations of $15,000; tax-exempt interest of $5,000; nontaxable life insurance proceeds of $10,000 on the death of a key employee; and a capital loss of $15,000.Whitman pays no dividends.What is Gordon's year-end basis in Whitman stock (after the distribution)?

Determine the proper classification(s)of the asset discussed in the following scenario: "Cher receives a copyright for a new song she has written" I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property. ​

Match each statement with the correct term below. -Amount realized

Tony died on April 5,2016.As part of his will,he leaves land that he paid $6,000 for in 2003 to his son Philip.On April 5,2016,the land is worth $11,000.However,due to local real estate conditions,the land continues to decline in value.On July 28 it is worth only $10,000; it declines further to $9,000 on October 5 and plunges to $7,000 on December 18. I.In the absence of any special elections,Philip's basis in the land is $6,000. II.If the executor distributes the land to Philip on July 28,Philip's basis in the land will be $10,000. ​

Diane receives a gift of stock from Sue on July 2,2016,when the stock was trading for $20,000.Sue paid $4,000 for the stock several years ago.Sue pays a gift tax of $500 on the transfer.Diane's basis in the stock is: