Exam 13: Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

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

Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.

After 5 years of marriage,Dave and Janet decided to get a divorce.As part of the divorce settlement,Janet transfers to Dave the house she purchased prior to their marriage.Janet's adjusted basis for the house is $125,000 and the fair market value is $200,000 on the date of the transfer.What are the tax consequences to Janet and to Dave as a result of the transfer?

On September 18,2010,Jerry received land and a building from Ted as a gift.Ted had purchased the land and building on March 5,2007,and his adjusted basis and the fair market value at the date of the gift were as follows: Ted paid gift tax on the transfer to Jerry of $96,000.

Tariq sold certain U.S.Government bonds and State of Oregon bonds at a loss to offset short-term capital gain from a previous transaction.He felt that the U.S.Government and State of Oregon bonds were "good" investments,so he repurchased identical securities within one week.Do these transactions constitute wash sales?

Lucinda,a calendar year taxpayer,owned a rental property with an adjusted basis of $215,000 in a major coastal city.When her property was condemned by the city government on November 5,2010,in order to build a convention center,Lucinda eventually received qualified replacement property from the city government on February 5,2011.This new property has a fair market value of $350,000.

Marge purchases the Kentwood Krackers,a AAA level baseball team,for $1.5 million.The appraised values of the identified assets are as follows: The Krackers have won the pennant for the past two years.Determine Marge's adjusted basis for the assets of the Kentwood Krackers.

Katrina,age 58,rented (as a tenant)the house that was her principal residence from January 1,2010 through December 31,2011.She purchased the house on January 1,2012,for $150,000 and continued to occupy it through June 30,2013.She leased it to a tenant from July 1,2013,through December 31,2014.On January 1,2015,she sells the house for $350,000.She incurs a realtor's commission of $20,000.Calculate her recognized gain if her objective is to minimize the recognition of gain and she does not intend to acquire another residence.

Discuss the relationship between the postponement of realized gain under § 1031 (like-kind exchanges)and the adjusted basis and holding period for the replacement property.

Lois received nontaxable stock rights with a fair market value of $4,000.The fair market value of the stock on which the rights were received is $24,000 (cost $14,000).Assume the rights are exercised by paying $31,000 plus the rights.Discuss how to calculate the basis of the old stock and the basis of the new stock.

Can dividend treatment result to a shareholder on a distribution from a corporation that has no E & P?

Nigel purchased a blending machine for $125,000 for use in his business.As to the machine,he has deducted MACRS cost recovery of $31,024,maintenance costs of $5,200,and repair costs of $4,000.Calculate Nigel's adjusted basis for the machine.

Describe the relationship between the recovery of capital doctrine and the realized and recognized gain and loss concepts.

Albert is considering two options for selling land for which he has an adjusted basis of $70,000 and on which there is a mortgage of $100,000.Under the first option,Albert will sell the land for $150,000 with a stipulation in the sales contract that he liquidate the mortgage before the sale is complete.Under the second option,Albert will sell the land for $50,000 and the buyer will assume the mortgage.Calculate Albert's recognized gain under both options.

Vicki sells a parcel of land to her son,Dan,for $40,000.Vicki's adjusted basis is $45,000.Two years later Dan gives the land to his fiancée,Karen.At that date,the land is worth $47,000.No gift tax is paid.Since Dan 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 $48,000.Calculate Karen's realized and recognized gain or loss.

Taxpayer's principal residence is destroyed by a tornado.Taxpayer is single and his realized gain is $400,000.Is it possible for the taxpayer's recognized gain to be $0?

Elbert gives stock worth $28,000 (no gift tax resulted)to his friend,Jeff,on June 8,2010.Elbert purchased the stock on September 1,2003,and his adjusted basis is $22,000.Jeff dies on December 8,2011,and bequeaths the stock to Elbert.At that date,the fair market value of the stock is $31,000.

Eunice Jean exchanges land held for investment located in Rolla,Missouri,for land to be held for investment located near Madrid,Spain.Her basis for the land given up is $370,000 and the fair market value of the land received is $390,000.Eunice Jean also receives cash of $25,000.

Mitchell owned an SUV that he had purchased two years ago for $48,000 and which he transfers to his sole proprietorship.How is the sole proprietorship's basis for the SUV calculated? What additional information does Mitchell need?

Under what circumstances will a distribution by a corporation to its only shareholder result in a capital gain?