Reference no: EM132794259

Questions -

Q1) During the current year, Mike sells a tract of land for $800,000 that he had received from Idaon March 10, 1995, when the land had a FMV of $310,000. The taxable gift was $300,000because the annual exclusion was $10,000 in 1995. Ida purchased the land on April 12, 1980, for $110,000. On the date of the gift, Ida paid a gift tax of $12,000. Mike paid a sales commission to his broker of $16,000 to sell the land.

a) What is Mike's realized gain on the sale?

b) How would your answer to part (a) change, if at all, if the FMV of the gift propertywere $85,000 on the date of the gift?

Q2) Mary received a Land Rover from her mother as a gift. Mom had purchased the Land Rovertwo years earlier for $65,000, but its fair market value at the date of the gift was only $50,000.No gift tax was paid by Mom at time of the gift.

a) If Mary sells the Land Rover for $70,000, what, if any, gain or loss will she recognizeon the sale?

b) If Mary sells the Land Rover for $45,000, what, if any gain or loss will she recognizeon the sale?

c) If Mary sells the Land Rover for $55,000, what, if any gain or loss will she recognize?

Q3) Bill and Wendy Ballard had the following stock sales during the current taxable year:

Gross Proceeds Basis

Crispy Crunch, Inc. $4,000 $5,000

Summer Solstice, Inc. 3,500 3,000

Sealy & Sealy, Inc. 2,000 10,000

Each stock was held for over 12 months. What amount should be reported on their current year tax return for capital gain/loss?

Q4) Harvey swaps his shopping center for Samantha's office building, and the exchange qualifies as a like-kind exchange. Harvey's adjusted basis for the shopping center is $600,000 and the center is subject to a liability of $180,000. The FMV of Samantha's office building is $770,000 and it is subject to a liability of $100,000. Each asset is transferred subject to the liability. What is Harvey's recognized gain, if any, on the transaction; and what is his basis in the office building?

Q5) A married couple purchased their principal residence for $300,000. They spent $40,000 on improvements. After living in it for 10 years, the couple sold the home for $650,000 and paid $36,000 in real estate commissions. What gain should the couple recognize on their joint return?

Q6) A taxpayer is exchanging a building used solely for business purposes for another building to be used in his business. The building originally cost $350,000 and he has taken $180,000 in depreciation. The old building is currently worth $200,000 and the new building the taxpayer wants in exchange is only worth $165,000. The other party agrees to give the taxpayer a truck worth $35,000 in addition to the new building. What is the taxpayer's gain or loss realized and recognized on the transaction and what is his basis in the new building received?

Q7) Martin, an attorney, provided legal services to a client, Norman. On December 15 of the same year, Norman gave Martin 100 shares of Johnson Corp. as compensation for services. The adjusted basis of the stock was $4,000, and its fair market value at the time of transfer was $5,000. Two months later, Martin sold the stock on February 15 for $7,500. What is the amount that Martin should recognize as gain on the sale of stock?

Q8) Poe files as head of household in 2019. He had taxable income of $90,000, including the sale of stock he held for investment for two years for a $20,000 gain. Poe sold no other assets during the year, and he did not have any capital loss carryovers.

a. What is Poe's 2019 tax liability?

b. What would Poe's 2019 tax liability be if he had held the stock for 10 months?

Q9) On July 1, 2019, Janice sold an antique for $12,000 that she had bought for her personal use in 2012 at a cost of $15,000. In her 2019 tax return, Janice should treat the sale of the antique as a transaction resulting in

a. A nondeductible loss.

b. Ordinary loss.

c. Short-term capital loss.

d. Long-term capital loss.

Q10) Miranda Jones owned a parcel of investment real estate that had an adjusted basis of$25,000 and a fair market value of $40,000. During 2019, Jones exchanged her investment realestate for the items of property listed below.

Land to be held for investment (fair market value) $35,000

A small sailboat to be held for personal use (fair market value) 3,000

Cash 2,000

What is Jones' recognized gain and basis in her new investment?