In
2002,Florence purchased 30 acres of land. She has not used the land for business purposes or made any substantial improvements to the property. During the currentyear, she subdivides the land into 15 lots and advertises the lots for sale. She sells four lots at a gain.
a. What is the character of the gain on the sale of the four lots?
b. Explain how the basis of each lot would be determined.
QI:5-15
Four years ago, Susan loaned $7,000 to her friend Joe. During the current year, the $7,000 loan is considered worthless. Explain how Susan should treat the worthless debt for tax purposes.
QI:5-25
Kurt, a cash-basis taxpayer, sells the following marketable securities, which are capital assets during
2016.
QI:5-26
How might the current treatment of capital losses discourage an individual investor from purchasing stock of a high-risk, start-up company?
QI:5-27
An individual taxpayer has realized a $40,000 loss on the sale of an asset that had a holding period of eight months. Explain why the taxpayer may be indifferent as to whether the asset is a capital asset.
QI:5-28
If Pam transfers an asset to Fred and the asset is subject to a liability that is assumed by Fred, how does Fred's assumption of the liability affect the amount realized byPam? How does Fred's assumption of the liability affect his basis for the property?
PI:5-34
Dexter receives a duplex as a gift from his uncle. The uncle's basis for the duplex and land is $170,000. At the time of the gift, the land and building have FMV s of $52,000 and $78,000, respectively. No gift tax is paid by Dexter's uncle at the time of the gift.
Requirements
a.
|
To determine gain, what is
Dexter's
basis for the land? |
b.
|
To determine gain, what is
Dexter's
basis for the building? |
c.
|
Will the basis of the land and building be the same as in Parts a and b for purposes of determining a loss?
|
a) (170000*52000) / (52000+78000)
b) (170000*78000) / (52000+78000)
c) No since FMV(52000+78000) is Less Than the donor's basis (170000)
- therefore Yes if xx Greater Than xx.
