Questions from Federal Taxation

Q: Sarah exchanges a yellow bus (used in her business) for

Sarah exchanges a yellow bus (used in her business) for Tyler’s gray bus and some garage equipment (used in his business). The assets have the following characteristics: a. What ar...

Q: Sebastian purchases two pieces of equipment for $100,000.

Sebastian purchases two pieces of equipment for $100,000. Appraisals of the equipment indicate that the fair market value of the first piece of equipment is $72,000 and that of the second piece of equ...

Q: Juliana purchased land three years ago for $50,000.

Juliana purchased land three years ago for $50,000. She gave the land to Tom, her brother, in the current year, when the fair market value was $70,000. No gift tax is paid on the transfer. Tom subsequ...

Q: Andrew owns a lathe (adjusted basis of $40,000

Andrew owns a lathe (adjusted basis of $40,000) that he uses in his business. He exchanges the lathe and $20,000 in cash for a new lathe worth $50,000. May Andrew avoid like-kind exchange treatment to...

Q: Camilo’s property, with an adjusted basis of $155,000

Camilo’s property, with an adjusted basis of $155,000, is condemned by the state. Camilo receives property with a fair market value of $180,000 as compensation for the property taken. a. What is Camil...

Q: Melba purchases land from Adrian. Melba gives Adrian $225,

Melba purchases land from Adrian. Melba gives Adrian $225,000 in cash and agrees to pay Adrian an additional $400,000 one year later plus interest at 5%. a. What is Melba’s adjusted basis for the land...

Q: Tom and Alice Honeycutt, ages 35 and 36, respectively,

Tom and Alice Honeycutt, ages 35 and 36, respectively, live at 101 Glass Road, Delton, MI 49046. Tom is a county employee, and Alice is a self-employed accountant. Tom’s Social Security number is 111-...

Q: Rennie owns a video game arcade. He buys vintage video games

Rennie owns a video game arcade. He buys vintage video games from estates, often at much less than the retail value of the property. He usually installs the vintage video games in a special section of...

Q: Devon Bishop, age 45, is single. He lives at

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1112. Devon does not want $3 to go to the Presidential Election Campaign Fund....

Q: Simon owns stock that has declined in value since acquired. He

Simon owns stock that has declined in value since acquired. He has decided either to give the stock to his nephew, Fred, or to sell it and give Fred the proceeds. If Fred receives the stock, he will s...