Exam 9: Acquisitions of Property

Larry gives Linda 300 shares of stock he had purchased several years ago for $8,000. On the date of the gift, the stock has a fair market value of $6,000. Linda sells the 300 shares for $5,500 one month after the gift, Linda realizes a

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

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.

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?

Hector receives a gift of rare books valued at $7,000. The books have an adjusted basis of $11,000 to the donor. Several months later, Hector sells the books to a professional collector for $8,000. What is Hector's gain or (loss) on the sale?

General Telephone 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.

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

Sammy buys a 20% interest in Duvall Corporation paying $100,000 cash on January 1, 2017. During 2017, Duvall Corporation reports a loss of $60,000 and pays cash dividends to shareholders of $5,000. For 2018, Duvall Corporation has income of $200,000 and pays cash dividends of $40,000. If Duvall Company is organized as an S Corporation, Sammy's basis in the Duvall Corporation stock at the end of 2018 is: ​

During 2007, Charles purchased 1,000 shares of Ryan Corporation stock for $12,000. On February 22, 2018, he sells all the shares for $9,000. On March 15, 2018, he repurchases 1,000 shares of Ryan for $8,000 and holds them until May 29, 2018, when he sells them for $10,000. What is Charles' recognized gain or loss on the May 29, 2018, sale?

Nanci purchases all of the assets of Michael's Security Service for $200,000. The assets are as follows: ? Asset Adjusted Basis Fair Market Value Inventory \ 25,000 \ 50,000 Equipment 60,000 40,000 Supplies 20,000 20,000 Building 80,000 95,000 Land 10,000 20,000 \ 195,000 \ 225,000 What is Nanci's basis in the equipment?

Match each statement with the correct term below. -Holding period

Samantha receives 100 shares of Burnet Corporation stock as a gift from her cousin. At the date of the gift the stock is valued at $60 per share. It cost her cousin $10 per share several years before. One month later, Samantha's uncle dies and she inherits 100 shares of Crockett Corporation stock from her uncle's estate. The stock cost her uncle $10 per share twenty-five years ago. On the date of death the stock has a value of $60 per share. Samantha needs money to invest in her business, but she does not need to sell both blocks of stock this year. Which stock would you recommend Samantha to sell? (Assume any long-term capital gains would be taxed at 15%.)

Juan and Dorothy purchase a new residence on May 1, 2018. Juan and Dorothy pay the full amount of the 2018 property taxes of $7,200 on their new house when the taxes became due in December of 2018. What amount of the taxes that Juan and Dorothy pay in December 2018 can they deduct on their 2018 tax return?

Diane receives a gift of stock from Sue on July 2, 2018, 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:

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

Determine the adjusted basis of the following assets. a.Dennis buys land by paying $45,000 in cash and assuming a loan for $45,000. He incurs legal fees and commissions of $5,000. He pays $3,000 to have tree seedlings planted on the property. A flood causes $6,000 of damage to the property. Dennis does not carry flood insurance, so he deducts the total loss on his tax return. His property tax liability for this year is $750 and his interest on the loan is $1,850. b.Tyler buys 100 shares of Oliver Corporation stock at $150 per share plus commissions of $300. At the end of the year, Oliver pays a $10 per share cash dividend and informs shareholders that $6 per share is taxable as a dividend and $4 is a nontaxable dividend. c.Taylor Corporation acquires an asset for $8,000 in its first year of operation. Since the company suffers a loss during this first year of operation, the bookkeeper decides to deduct only half of the depreciation that was allowable on this asset and claims a depreciation deduction of $800, instead of $1,600.

Determine the proper classification(s) of the asset discussed in the following scenario: Victoria purchased a new show case saw for her antique business. I.Personal use property. IV.Intangible property. II.Business use property. V.Real estate. III.Tangible property. VI.Personal property. ​

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

Sandi sells 100 shares of Gray Corporation stock on December 4, 2018. She inherited the stock from Christine, who died on January 30, 2018. The executor of the estate used the primary valuation date. Sandi's holding period for the stock is

Phyllis purchased an automobile for $3,000 down and a note for $15,000. During the year she paid interest of $1,000. Her basis is $18,000.