FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Basis, Gain and Loss, and Nontaxable Exchanges

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 101

Multiple Choice

Review LaterAdd Note

Review Later

Andrew acquires 2,000 shares of Eagle Corporation stock for $100,000 on March 31, 2013.On January 1, 2017, he sells 125 shares for $5,000.On January 22, 2017, he purchases 135 shares of Eagle Corporation stock for $6,075.When does Andrew's holding period begin for the 135 shares?

A) January 22, 2017.
B) January 1, 2017.
C) March 31, 2013.
D) March 31, 2013, for 125 shares and January 22, 2017, for 10 shares.
E) None of the above.

F) A) and B)
G) All of the above

Correct Answer

verified

Show Answer

Question 102

True/False

Review LaterAdd Note

Review Later

If the alternate valuation date is elected by the executor of the estate, the basis of all of the property included in the decedent's estate becomes the fair market value 6 months after the decedent's death.

A) True
B) False

Correct Answer

verified

Show Answer

Question 103

True/False

Review LaterAdd Note

The adjusted basis for a taxable bond purchased at a premium is reduced if the amortization election is made.The amount of the amortized premium is treated as an interest deduction.

The amount received for a utility easement on land is included in the gross income of the taxpayer.

The nonrecognition of gains and losses under § 1031 is mandatory for gains and elective for losses.

If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion) and the amount reinvested in replacement property exceeds the amount realized, the basis of the replacement property is:

Marsha transfers her personal use automobile to her business (a sole proprietorship).The car's adjusted basis is $30,000 and the fair market value is $16,000.No cost recovery had been deducted by Marsha, since she held the car for personal use.Determine the adjusted basis of the car to Marsha's sole proprietorship including the basis for cost recovery.

Leonore exchanges 5,000 shares of Pelican, Inc., stock for 2,000 shares of Blue Heron, Inc., stock.Leonore's adjusted basis for the Pelican stock is $300,000 and the fair market value of the Blue Heron stock is $350,000.Leonore's recognized gain is $0 and her adjusted basis for the Blue Heron stock is $300,000. ​

The holding period of property acquired by gift may begin on:

Kevin purchased 5,000 shares of Purple Corporation stock at $10 per share.Two years later, he receives a 5% common stock dividend.At that time, the common stock of Purple Corporation had a fair market value of $12.50 per share.What is the basis of the Purple Corporation stock, the per share basis, and gain recognized upon receipt of the common stock dividend?

A taxpayer who sells his or her principal residence at a realized loss can elect to recognize the loss even if a qualified residence is acquired during the statutory time period.

Shari exchanges an office building in New Orleans (adjusted basis of $700,000) for an apartment building in Baton Rouge (fair market value of $900,000).In addition, she receives $100,000 of cash.Shari's recognized gain is $100,000 and her basis for the apartment building is $800,000 ($700,000 adjusted basis + $100,000 recognized gain).

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

Arthur owns a tract of undeveloped land (adjusted basis of $145,000) which he sells to his son, Ned, for its fair market value of $105,000.What is Arthur's recognized gain or loss and Ned's basis in the land?

Albert purchased a tract of land for $140,000 in 2014 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000.Highway engineers surveyed the property and indicated that he would probably get $180,000.The highway project was abandoned in 2017 and the value of the land fell to $100,000.What is the amount of loss Albert can claim in 2017?

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?

Jared, a fiscal year taxpayer with a August 31st year-end, owns an office building (adjusted basis of $800,000) that was destroyed by fire on December 24, 2017.If the insurance settlement was $950,000 (received March 1, 2018) , what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?

Sandra's automobile, which is used exclusively in her trade or business, was damaged in an accident.The adjusted basis prior to the accident was $11,000.The fair market value before the accident was $10,000 and the fair market value after the accident is $6,000.Insurance proceeds of $3,200 are received.What is Sandra's adjusted basis for the automobile after the casualty?

​Milton owns a bond (face value of $25,000) for which he paid $28,000.Which of the following statements is correct?

If the recognized gain on an involuntary conversion equals the realized gain because of a reinvestment deficiency, the basis of the replacement property will be more than its cost (cost plus realized gain).