Questions from Federal Taxation

Q: Hilde purchased all of the rights to a patent on a new

Hilde purchased all of the rights to a patent on a new garden tool developed by a friend of hers who is an amateur inventor. The inventor obtained the patent rights, set up a manufacturing company to...

Q: Mac, an inventor, obtained a patent on a chemical process

Mac, an inventor, obtained a patent on a chemical process to clean old aluminum siding so that it can be easily repainted. Mac has a $50,000 tax basis in the patent. Mac does not have the capital to b...

Q: Issac has AGI of $73,400 and incurred the following

Issac has AGI of $73,400 and incurred the following expenses. How much of the business and personal expenditures are deductible (after any limitation) either as miscellaneous itemized deductions or as...

Q: Freys, Inc., sells a 12-year “stuffed potato

Freys, Inc., sells a 12-year “stuffed potato” franchise to Reynaldo. The franchise contains many restrictions on how Reynaldo may operate his store. For instance, Reynaldo cannot use less than Grade 1...

Q: Angie owns numerous strip malls. A major tenant of one of

Angie owns numerous strip malls. A major tenant of one of the strip malls wanted to cancel its lease because it was moving to another city. After lengthy negotiations, the tenant paid Angie $60,000 to...

Q: A corporation distributes a truck it has owned for three years to

A corporation distributes a truck it has owned for three years to its sole shareholder. The shareholder will use the truck for business activity. The truck’s fair market value at the time of the distr...

Q: Maria held vacant land that qualified as an investment asset. She

Maria held vacant land that qualified as an investment asset. She purchased the vacant land on April 10, 2013. She exchanged the vacant land for a rental house in a qualifying like-kind exchange on Ja...

Q: Ten years ago, Liam, who is single, purchased a

Ten years ago, Liam, who is single, purchased a personal residence for $340,000 and took out a mortgage of $200,000 on the property. In May of the current year, when the residence had a fair market va...

Q: Roger inherited 100 shares of Periwinkle stock when his mother, Emily

Roger inherited 100 shares of Periwinkle stock when his mother, Emily, died. Emily had acquired the stock for a total of $60,000 on November 15, 2013. She died on August 10, 2017, and the shares were...

Q: Sarah received a gift of farmland from her father. The land

Sarah received a gift of farmland from her father. The land was worth $4 million at the date of the gift, had been farmed by her father for 40 years, and had a tax basis for her father of $30,000. Sar...