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Exam 13: Property Transactions

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Question 51

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

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The follow...

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Question 52

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For gifts made after 1976,when will part of the gift tax paid by the donor be added to the donee's basis?

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This result would occur if the fair mark...

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Question 53

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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 5,2011,in order to build a convention center,Lucinda eventually received qualified replacement property from the city government on February 5,2012.This new property has a fair market value of $350,000.

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

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.

Under what circumstance is there recognition of some or all of the realized gain associated with the giving of boot by the taxpayer in a like-kind exchange?

For the following exchanges,indicate which qualify as like-kind property.

Distinguish between a direct involuntary conversion and an indirect involuntary conversion.

Misty owns stock in Violet,Inc.,for which her adjusted basis is $112,000.She receives a cash distribution of $40,000 from Violet.

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?

Patty's factory building,which has an adjusted basis of $325,000,is destroyed by fire on March 5,2011.Insurance proceeds of $475,000 are received on May 1,2011.She has a new factory building constructed for $450,000,which she occupies on October 1,2011.Assuming Patty's objective is to minimize the tax liability,calculate her recognized gain or loss and the basis of the new factory building.

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

Define qualified small business stock under § 1045.

For each of the following involuntary conversions,determine if the property qualifies as replacement property.

Samuel's hotel is condemned by the City Housing Authority on July 5,2011,for which he is paid condemnation proceeds of $950,000.He first received official notification of the pending condemnation on May 2,2011.Samuel's adjusted basis for the hotel is $600,000 and he uses a fiscal year for tax purposes with a September 30 tax year-end.