Exam 9: Acquisitions of Property

Robert receives a car as a gift from his mother.The car's purchase price was $20,000,and it was used personally prior to the gift.Robert uses the car 80% of the time in his pizza business.The car's value at the date of the gift is $9,000.What is Robert's basis in the car for depreciation purposes?

Rosie inherits 1,000 shares of Northern Skies Airline Corporation stock from the estate of her Uncle Tony.Tony died on July 2,2013.The stock's value on July 2,2013,is $4,000.Tony's basis in the stock was $3,000.The stock has a fair market vale of $7,000 on October 1,2013,when it is transferred to her.Rosie sells the stock October 11,2014.What is Rosie's basis in the stock?

If the executor of a decedent's estate elects the alternate valuation date and none of the estate's property is sold or distributed,the estate's assets are valued as of how many months after the date of death?

Sara constructs a small storage shed for resale to customers and incurs the following costs: \ 3,000 Direct labor 1,500 Direct materials 700 Other direct costs 300 Allocated indirect costs a.What is Sara's basis in this storage shed? b.Sara normally sells the storage sheds for $7,000 each.John,one of the workers who builds the storage sheds,buys one for $5,000.What is John's basis in his storage shed?

Buffey operates a delivery service.She purchased a van in 2011 for $25,000,and she sold it in 2013 for $15,000.Buffey did not deduct any depreciation on the van from 2011 through 2013,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?

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

Match each statement with the correct term below. -Alternate valuation date

The general rule for determining the basis of inherited property is that the basis in the hands of the heir is its fair market value at the date of death or at the alternative valuation date.

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.

Match each statement with the correct term below. -Tangible 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.

Match each statement with the correct term below. -Personal use property

Perry inherits stock from his Aunt Margaret that had a basis of $40,000 to Margaret and a fair market value of $54,000 on May 20,2013,the date of her death.Paul sells the stock on June 21,2013 for $65,000.What is the amount and character of the gain or loss on the sale?

Morrris,an attorney,performs 5 hours of legal work for Andy.Morrris 's normal billing rate is $120 per hour.Andy,a software consultant,gives Morrris a new computer for his office in payment of the bill.The computer's adjusted basis was $500 and its fair market value is $550 Morrris ' basis in the computer is

Pedro purchased all of the stock of Regis Corporation.Since he purchased all of the stock the basis in all of the corporation's assets must be restated to fair market value.

Determine the year-end adjusted basis of Roberto's 1/2 interest in the Halifax Partnership.At the beginning of the year,Roberto's adjusted basis is $80,000.The net operating profit of the partnership is $90,000.Also,Halifax distributes $15,000 of cash to Roberto.

Terry gives Brenda 1,000 shares of stock he had purchased several years ago for $5,000.On the date of the gift,the stock has a fair market value of $4,000.Brenda sells the 1,000 shares for $5,500 one month after the gift,Brenda realizes a

Morrison received a gift of income-producing property with an adjusted basis of $50,000 to the donor and a fair market value of $40,000 on the date of the gift (December 31,2013).The donor paid a gift tax of $1,000.Morrison sells the property on September 17,2013 for $45,000.What is the gain or loss on the property?

Brad,an engineering consultant,was given stock valued at $3,000 for services rendered.His basis in the stock he received for the services is zero since he received no cash.

Match each statement with the correct term below. -Basis