Exam 9: Acquisitions of Property

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. ​

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?

On June 10, 2017, 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 2016. Akira sells the marble statue July 5, 2018, for $8,000. When does Akira's holding period for the rare marble statue begin?

Oscar buys a 10% interest in Britanny Corporation paying $92,000 cash on January 1, 2017. During 2017, Britanny Corporation reports a loss of $30,000 and pays cash dividends to shareholders of $10,000. For 2018, Britanny Corporation has a loss of $60,000 and pays cash dividends of $20,000. If Britanny Company is organized as an S Corporation, Oscar's basis in the Britanny Corporation stock at the end of 2018 is:

Match each statement with the correct term below. -Basis

Determine the proper classification(s) of the asset discussed in the following scenario: Judge Marshall purchased a new gold-trimmed gavel to decorate his living room. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property. ​

Tillman is building a warehouse for use in his business. The construction costs include the following: ? Direct labor \ 35,000 Direct materials 20,000 Architect fees 5,000 Interest on construction loan 3,000 Depreciation of equipment used in construction 1,500 Indirect Administrative costs during construction 2,000 What is Tillman's basis in the warehouse?

Indicate the classification of each of the following assets as personal property, real property, intangible property, personal use property or business use property. a.A dentist purchases a sofa for the waiting room at his dental office. b.A dentist purchases a sofa for his living room at home. c.A dentist has a landscape architect plant shrubbery and trees around his office building. d.A dentist pays a landscaper to grade his land and install fencing for a baseball practice field for his son. e.A dentist obtains a patent for a procedure he developed.

Mitaya purchased 500 shares of Sundown Inc., common stock on December 13, 2016, at a cost of $3,600. She paid a commission of $150 on the purchase. On February 18, 2017, she received 250 shares of Sundown Inc., common stock as a tax-free dividend. Mitaya sells 600 shares for $3,700 on January 8, 2018, and pays a $100 commission on the sale. Mitaya's gain (loss) on the sale is characterized as:

Match each statement with the correct term below. -Personalty

David pays $35,000 cash and issues a mortgage note for $95,000 to purchase land. He pays $750 to his attorney for reviewing the purchase agreement. David's initial basis in the land is

Match each statement with the correct term below. -Direct purchase

On July 3, 2018, Cynthia receives a gift of a collection of books valued at $10,000. The books have an adjusted basis of $6,000 to the donor. They had been purchased in 2006. Several months after receiving the gift, Cynthia sells the books to a professional collector for $9,000. How is Cynthia's holding period for the books determined?

An asset's holding period normally begins on the day after it is acquired and ends on the day of its disposition.

Determine the proper classification(s) of the asset discussed in the following scenario: Judge Ruiz purchased a new brass-trimmed gavel to use in her courtroom. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property. ​

When a security is sold at a loss and and a substantially identical security has been purchased within 30 days before the sale date the loss is disallowed because it is classified as a wash sale.

Lydia purchased a sapphire bracelet for $3,000 while vacationing in Hong Kong during 2006. Lydia gives the bracelet to her daughter Amy when she graduates from college in 2018. The bracelet is appraised at $8,000 on that date. In October 2018, Amy sells the bracelet for $9,000. How is Amy's holding period for the bracelet determined?

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?

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. ​

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, 2018). The donor paid a gift tax of $1,000. Morrison sells the property on September 17, 2019 for $45,000. What is the gain or loss on the property?