Exam 13: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Justin owns 1,000 shares of Oriole Corporation common stock (adjusted basis of $9,800). On April 27, 2012, he sells 300 shares for $2,800, while on May 5, 2012, he purchases 200 shares for $2,500.

Eunice Jean exchanges land held for investment located in Rolla, Missouri, for land to be held for investment located near Madrid, Spain.Her basis for the land given up is $370,000 and the fair market value of the land received is $390,000.Eunice Jean also receives cash of $25,000.

For a corporate distribution of cash or other property to a shareholder, when does dividend income or a return of capital result?

Sammy exchanges equipment used in his business in a like-kind exchange.The property exchanged is as follows: The other party assumes the liability.

Emma gives her personal use automobile (cost of $29,000; fair market value of $15,000) to her son, Louis, on July 3, 2012. She has owned the automobile since July 1, 2009.

How is the donee's basis calculated for the gift of appreciated property for a gift made before 1977? Assume the donor pays gift tax.

Annette purchased stock on March 1, 2012, for $165,000.At December 31, 2012, it was worth $171,000.She also purchased a bond on September 1, 2012, for $20,000.At year end, it was worth $16,000.Determine Annette's realized and recognized gain or loss.

Amy's manufacturing plant is destroyed by fire on the afternoon of October 25, 2012. The adjusted basis is $550,000. The insurance company offers a settlement of $520,000. After protracted negotiations, Amy receives $575,000 on June 20, 2013. Amy is a fiscal year taxpayer whose tax year ends on June 30th. What is the latest date that Amy can invest the proceeds in qualifying replacement property and elect to defer the gain under § 1033?

Discuss the treatment of realized gains from involuntary conversions.

If a taxpayer purchases taxable bonds at a premium, the amortization of the premium is elective.However, if a taxpayer purchases tax-exempt bonds at a premium, the amortization of the premium is mandatory.Explain this difference in the treatment.

Define fair market value as it relates to property transactions.

What effect does a deductible casualty loss have on the adjusted basis of property?