Questions from General Taxation

Q: Mr. Sheraton suffers from severe arthritis. His physician advised him

Mr. Sheraton suffers from severe arthritis. His physician advised him to swim for at least one hour every day in a heated pool. Because such a facility is not conveniently located in his area, he paid...

Q: Mr. Ruskin, a CPA who charges $150 per hour

Mr. Ruskin, a CPA who charges $150 per hour for his professional services, keeps the financial records for a local charity. Although he spends at least 10 hours each month at this task, he doesn’t cha...

Q: Mr. and Mrs. Fitch bought $500 worth of Girl

Mr. and Mrs. Fitch bought $500 worth of Girl Scout cookies from their godchild. Because they don’t eat sweets, they gave away every box to various friends and family members.

Q: Mr. Dix borrowed $600,000 to purchase 62 acres

Mr. Dix borrowed $600,000 to purchase 62 acres of undeveloped land and secured the debt with the land. He converted a three-room log cabin on the land to his principal residence. This year, he paid $3...

Q: For the past 10 years, Mr. Bianco lived on his

For the past 10 years, Mr. Bianco lived on his sailboat for five months of the year and spent the other seven months living in his daughter’s home. This year, he realized a $35,200 gain on sale of the...

Q: Ms. Seagram paid $155,000 for a house that

Ms. Seagram paid $155,000 for a house that she occupied as her principal residence until February 1, when she moved out and converted the house to rental property. The appraised FMV of the house was $...

Q: Mr. and Mrs. Ayala purchased their home one year ago

Mr. and Mrs. Ayala purchased their home one year ago. This year, a local government attempted to seize the home because the former residents had failed to pay their property taxes for 12 years. Mr. an...

Q: Mr. Saul, a real estate broker, just negotiated the

Mr. Saul, a real estate broker, just negotiated the sale of a home for a wealthy client. Two days after the sale closed, he received a beautiful leather briefcase from the client with a card reading:...

Q: Mr. Tinsler was a contestant on a game show and won

Mr. Tinsler was a contestant on a game show and won a vacuum cleaner with a retail price of $365. Three months later, he sold the unused appliance in a garage sale for $275.

Q: On January 10, 2017, a fire destroyed a warehouse owned

On January 10, 2017, a fire destroyed a warehouse owned by NP Company. NP’s adjusted basis in the warehouse was $530,000. On March 12, 2017, NP received a $650,000 reimbursement from its insurance com...