Question 1

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

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Question 2

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

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Question 3

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?
If the bond sales resulted in the recognition of gain (rather than loss),would the wash sale provisions prevent the gains from being recognized?

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Question 4

How is the donee's basis calculated for the gift of appreciated property for a gift made before 1977? Assume the donor pays gift tax.

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Question 5

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

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Question 6

Joseph converts a building (adjusted basis of $50,000 and fair market value of $40,000) from personal use to business use.Justin receives a building with a $40,000 fair market value ($50,000 donor's adjusted basis) from his mother as a gift.Discuss the tax consequences with respect to Joseph's and Justin's adjusted basis.

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Question 7

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?

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Question 8

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.

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Question 9

For disallowed losses on related-party transactions,who has the right of offset?

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Question 10

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

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Question 11

Sam and Cheryl,husband and wife,own property jointly.The property has an adjusted basis of $400,000 and a fair market value of $500,000.
a.Discuss the rules for the calculation of the adjusted basis of the property to Sam if he inherits his wife's share of the property and Sam and Cheryl live in a community property state.
b.If they live in a common law state?

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Question 12

Tara owns common stock in Taupe,Inc.,with an adjusted basis of $250,000.She receives a preferred stock dividend which is nontaxable.
a.What effect does the preferred stock dividend have on Tara's adjusted basis of the common stock?
b.How is the basis of the preferred stock calculated?
c.What effect does the preferred stock dividend have on Tara's gross income?

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Question 13

Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a niece.

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Question 14

Discuss the application of holding period rules to property acquired by gift and inheritance.

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Question 15

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?

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Question 16

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

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Question 17

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

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Question 18

Define fair market value as it relates to property transactions.

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Question 19

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

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Question 20

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?

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Quiz 13: Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges