Questions from General Taxation

Q: Luciana, a nonshareholder, purchases a condominium from her employer for

Luciana, a nonshareholder, purchases a condominium from her employer for $85,000. The fair market value of the condominium is $120,000. What is Luciana’s basis in the condominium and the amount of any...

Q: Finch, Inc., purchases 1,000 shares of Bluebird Corporation

Finch, Inc., purchases 1,000 shares of Bluebird Corporation stock on October 3, 2015, for $300,000. On December 12, 2015, Finch purchases an additional 750 shares of Bluebird stock for $210,000. Accor...

Q: Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000 on August 15, 2015. The assets of the business are as follows: Rod and Agnes agree that $50,000 of the purcha...

Q: Roberto has received various gifts over the years. He has decided

Roberto has received various gifts over the years. He has decided to dis- pose of the following assets he received as gifts: a. In 1951, he received land worth $32,000. The donor’s adjusted basis was...

Q: Nicky receives a car from Sam as a gift. Sam paid

Nicky receives a car from Sam as a gift. Sam paid $48,000 for the car. He had used it for business purposes and had deducted $10,000 for depreciation up to the time he gave the car to Nicky. The fair...

Q: Vito is the sole shareholder of Vito, Inc. The corporation

Vito is the sole shareholder of Vito, Inc. The corporation also employs him. On June 30, 2015, Vito borrowed $8,000 from Vito, Inc., and on July 1, 2016, he borrowed an additional $10,000. Both loans...

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...

Q: On September 18, 2015, Gerald received land and a building

On September 18, 2015, Gerald received land and a building from Frank as a gift. Frank’s adjusted basis and the fair market value at the date of the gift are as follows: No gift tax...

Q: Dan bought a hotel for $2,600,000 in

Dan bought a hotel for $2,600,000 in January 2011. In May 2015, he died and left the hotel to Ed. While Dan owned the hotel, he deducted $289,000 of cost recovery. The fair market value in May 2015 wa...

Q: Sheila sells land to Elane, her sister, for the fair

Sheila sells land to Elane, her sister, for the fair market value of $40,000. Six months later when the land is worth $45,000, Elane gives it to Jacob, her son. (No gift tax resulted.) Shortly thereaf...