Questions from Federal Taxation

Q: Bob is notified by the city public housing authority on May 3

Bob is notified by the city public housing authority on May 3, 2017, that his apartment building is going to be condemned as part of an urban renewal project. On June 1, 2017, Carol offers to buy the...

Q: A warehouse owned by Martha and used in her business (i

A warehouse owned by Martha and used in her business (i.e., to store inventory) is being condemned by the city to provide a right of way for a highway. The warehouse has appreciated by $180,000 based...

Q: To qualify for exclusion treatment on the sale of a principal residence

To qualify for exclusion treatment on the sale of a principal residence, the residence must have been owned and used by the taxpayer for at least two years during the five-year period ending on the da...

Q: Ivan invests in land, and Grace invests in taxable bonds.

Ivan invests in land, and Grace invests in taxable bonds. The land appreciates by $8,000 each year, and the bonds earn interest of $8,000 each year. After holding the land and bonds for five years, Iv...

Q: Carol and Dave each purchase 100 shares of stock of Burgundy,

Carol and Dave each purchase 100 shares of stock of Burgundy, Inc., a publicly owned corporation, in July for $10,000 each. Carol sells her stock on December 31 for $8,000. Because Burgundy’s stock is...

Q: If a taxpayer sells property for cash, the amount realized consists

If a taxpayer sells property for cash, the amount realized consists of the net proceeds from the sale. For each of the following, indicate the effect on the amount realized: a. The property is sold on...

Q: Taylor is negotiating to buy some land. Under the first option

Taylor is negotiating to buy some land. Under the first option, Taylor will give Ella $150,000 and assume her mortgage on the land for $100,000. Under the second option, Taylor will give Ella $250,000...

Q: Stephanie owns a machine (adjusted basis of $90,000

Stephanie owns a machine (adjusted basis of $90,000; fair market value of $125,000) that she uses in her business. She exchanges it for another machine (worth $100,000) and stock (worth $25,000). Dete...

Q: Marge owns land and a building (held for investment) with

Marge owns land and a building (held for investment) with an adjusted basis of $75,000 and a fair market value of $250,000. The property is subject to a mortgage of $400,000. Because Marge is in arrea...

Q: On July 16, 2017, Logan acquires land and a building

On July 16, 2017, Logan acquires land and a building for $500,000 to use in his sole proprietorship. Of the purchase price, $400,000 is allocated to the building, and $100,000 is allocated to the land...