Question 1

Ed and Cheryl have been married for 27 years.They own land jointly with a basis of $300,000.Ed dies in 2012,when the fair market value of the land is $500,000.Under the joint ownership arrangement,the land passed to Cheryl.

Accepted Answer

The answer of Ed and Cheryl have been married for...

Question 2

For a corporate distribution of cash or other property to a shareholder,when does dividend income or a return of capital result?

Accepted Answer

The answer of For a corporate distribution of cash or...

Question 3

What effect does a deductible casualty loss have on the adjusted basis of property?

Accepted Answer

The answer of What effect does a deductible casualty loss...

Question 4

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

Accepted Answer

The answer of Describe the relationship between the recovery of...

Question 5

If a taxpayer purchases a business and the price exceeds the fair market value of the listed assets,how is the excess allocated among the purchased assets?

Accepted Answer

The answer of If a taxpayer purchases a business and...

Question 6

Define a bargain purchase of property and discuss the related tax consequences.

Accepted Answer

The answer of Define a bargain purchase of property and...

Question 7

What is the difference between the depreciation (or cost recovery)allowed and the depreciation (or cost recovery)allowable and what effect does each have on the adjusted basis of property?

Accepted Answer

The answer of What is the difference between the depreciation...

Question 8

Maurice sells his personal use automobile at a realized loss.Under what circumstances can Maurice deduct the loss? What if the personal use asset was sold at a realized gain?

Accepted Answer

The answer of Maurice sells his personal use automobile at...

Question 9

When a property transaction occurs,what four questions should be considered with respect to the sale or other disposition?

Accepted Answer

The answer of When a property transaction occurs,what four questions...

Question 10

Define fair market value as it relates to property transactions.

Accepted Answer

The answer of Define fair market value as it relates...

Question 11

On January 15 of the current taxable year,Merle sold stock with a cost of $40,000 to his brother Ned for $25,000,its fair market value.On June 21,Ned sold the stock to a friend for $26,000.

Accepted Answer

The answer of On January 15 of the current taxable...

Question 12

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

Accepted Answer

The answer of What is the general formula for calculating...

Question 13

Justin owns 1,000 shares of Oriole Corporation common stock (adjusted basis of $9,800).On April 27,2012,he sells 300 shares for $2,800,while on May 5,2012,he purchases 200 shares for $2,500.

Accepted Answer

The answer of Justin owns 1,000 shares of Oriole Corporation...

Question 14

Lynn transfers her personal use automobile to her business (a sole proprietorship).The car's adjusted basis is $35,000 and the fair market value is $12,000.No cost recovery had been deducted by Lynn,since she held the car for personal use.Determine the adjusted basis of the car to Lynn's sole proprietorship including the basis for cost recovery.

Accepted Answer

The answer of Lynn transfers her personal use automobile to...

Question 15

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

Accepted Answer

The answer of Under what circumstances will a distribution by...

Question 16

Monica sells a parcel of land to her son,Elbert,for $90,000.Monica's adjusted basis is $100,000.Three years later,Elbert gives the land to his fiancée,Karen.At that date,the land is worth $104,000.No gift tax is paid.Since Elbert 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 $110,000.At the same time,Karen sends Elbert a "Dear John" email.Calculate Karen's realized and recognized gain or loss.

Accepted Answer

The answer of Monica sells a parcel of land to...

Question 17

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.

Accepted Answer

The answer of Lois received nontaxable stock rights with a...

Question 18

Discuss the effect of a liability assumption on the seller's amount realized and the buyer's adjusted basis.

Accepted Answer

The answer of Discuss the effect of a liability assumption...

Question 19

If a taxpayer purchases taxable bonds at a premium,the amortization of the premium is elective.However,if a taxpayer purchases tax-exempt bonds at a premium,the amortization of the premium is mandatory.Explain this difference in the treatment.

Accepted Answer

The answer of If a taxpayer purchases taxable bonds at...

Question 20

Taylor owns common stock in Taupe,Inc.,with an adjusted basis of $100,000.She receives a preferred stock dividend which is nontaxable.

Accepted Answer

The answer of Taylor owns common stock in Taupe,Inc.,with an...

Quiz 14: Property Transactions: Determination of Gain or Loss and Basis Considerations