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

The adjusted basis of property that is stolen is reduced by the amount of insurance proceeds received and by any recognized loss.

Paul sells property with an adjusted basis of $45,000 to his daughter Dean,for $38,000.Dean subsequently sells the property to her brother,Preston,for $38,000.Three years later,Preston sells the property to Hun,an unrelated party,for $50,000.What is Preston's recognized gain or loss on the sale of the property to Hun?

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

Andrew acquires 2,000 shares of Eagle Corporation stock for $100,000 on March 31,2005.On January 1,2012,he sells 125 shares for $5,000.On January 22,2012,he purchases 135 shares of Eagle Corporation stock for $6,075.When does Andrew's holding period begin for the 135 shares?

Samantha gives her son,Steve,stock (basis of $72,000; fair market value of $68,000)and no gift tax results.When Steve subsequently sells the stock for $69,000,his recognized gain or loss is:

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.

Molanda sells a parcel of land for $25,000 in cash and the buyer assumes Molanda's mortgage of $20,000 on the land.Molanda's amount realized is $45,000.

Nontaxable stock dividends result in:

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

This year,Fran receives a birthday gift of stock worth $75,000 from her aunt.The aunt has owned the stock (adjusted basis $50,000)for 10 years and pays gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000)or $75,000.

Cassie purchases a sole proprietorship for $145,000.The fair market value of the tangible assets is $110,000 and the agreed to value of goodwill is $10,000.Assuming there are no other intangible assets,Cassie's basis for the tangible assets is $132,917 ($110,000 + $22,917)and her basis for the goodwill is $12,083 ($10,000 + $2,083).

Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4,2012,the date of the decedent's death.The executor distributes the land to Kelly on November 12,2012,at which time the fair market value is $49,000.The fair market value on February 4,2013,is $45,000.In filing the estate tax return,the executor elects the alternate valuation date.Kelly sells the land on June 10,2013,for $48,000.What is her recognized gain or loss?

Ollie owns a personal use car for which he originally paid $42,000.He trades the car in on a sports utility vehicle (SUV)paying the automobile dealer cash of $24,000.If the negotiated price of the SUV is $45,000,what is Ollie's recognized gain or loss and his adjusted basis for the SUV?

Albert purchased a tract of land for $140,000 in 2009 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 2012 and the value of the land fell to $100,000.What is the amount of loss Albert can claim in 2012?