Exam 13: Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Karen purchased 100 shares of Gold Corporation stock for $11,500 on January 1,2002.In the current tax year,she sells 25 shares of the 100 shares purchased on January 1,2002,for $2,500.Twenty-five days earlier,she had purchased 30 shares for $3,000.What is Karen's recognized gain or loss on the sale of the stock,and what is her basis in the 30 shares purchased 25 days earlier?

A taxpayer who sells his or her principal residence at a realized loss can elect to recognize the loss even if a qualified residence is acquired during the statutory time period.

Realized losses from the sale or exchange of stock are disallowed if within 30 days before or 30 days after the sale or exchange,the taxpayer acquires substantially identical stock.

The requirements for replacement property in involuntary conversions are generally less restrictive than the requirements in like-kind exchanges.

The taxpayer can elect to have the exclusion of gain under § 121 (sale of principal residence)not apply.

The taxpayer owns stock with an adjusted basis of $15,000 and a fair market value of $8,000.If the stock or cash is going to be given to her niece,it is preferable for the taxpayer to sell the stock and give the $8,000 of cash to her niece.The same preference would exist if the recipient were a qualified charitable organization.

Angela receives stock (worth $11,000)as a gift from her aunt.Her aunt's adjusted basis is $7,000 and the transfer did not result in a gift tax.Angela's basis in the stock is $11,000.

Which of the following decreases adjusted basis?

Martha gives 100 shares of Green,Inc.stock to her niece,Jennifer.Martha's adjusted basis for the stock is $20,000 and the fair market value is $30,000.Four months after the gift,Jennifer is killed in an automobile accident.Martha inherits the stock which then is worth $35,000.What is the adjusted basis of the inherited stock to Martha?

Carol received nontaxable stock rights on May 14,2010.She allocated $6,000 of the $40,000 basis of the associated stock to the stock rights.The stock rights expire on September 14,2010.What is Carol's recognized loss on the expiration of the stock rights?

If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion),makes the appropriate election,and the amount reinvested in replacement property is less than the amount realized,realized gain is:

Wyatt sells his principal residence in December 2010 and qualifies for the § 121 exclusion.He sells another principal residence in October 2011.Under no circumstance can Wyatt qualify for the § 121 exclusion on the sale of the second residence.

Ashley owns 200 acres of farm land is southeastern Virginia.Her adjusted basis for the land is $525,000 and there is a $390,000 mortgage on the land.She exchanges the land for an office building owned by Chris in Newark,New Jersey.The building has a fair market value of $450,000.Chris assumes Ashley's mortgage on the land.What is the amount of Ashley's recognized gain or loss on the exchange?

If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion)and the amount reinvested in replacement property exceeds the amount realized,the basis of the replacement property is:

Which of the following statements is correct with respect to qualified replacement property in a § 1033 involuntary conversion?

Which of the following statements is correct with respect to § 1044 (rollover of publicly traded securities gain into specialized small business investment companies)?

Milton owns a bond (face value of $25,000)for which he paid $28,000.Which of the following statements is correct?

Nontaxable stock dividends result in no change to the total basis of the old and new stock.

The basis of boot received in a like-kind exchange is its fair market value.

A loss from the sale of a personal use asset that would be disallowed can be recognized if the taxpayer converts the asset to business use prior to its sale.