CHAPTER 14–PROPERTY TRANSACTIONS

| November 9, 2018

77.
Abner gives his daughter, Melissa, stock (basis of
$50,000; fair market value of $44,000). No gift tax is paid. If Melissa
subsequently sells the stock for $53,000, what is her recognized gain or loss?

A.
$0.

B.
$3,000.
C.
$9,000.
D.
$53,000.
E.
None of the above.

78.
Gift
property (disregarding any adjustment for gift tax paid by the donor):

A.
Has
no basis to the donee because he or she did not pay anything for the property.
B.
Has the same basis to the donee as the donor’s
adjusted basis if the donee disposes of the property at a gain.

C.
Has the same basis to the donee as the donor’s
adjusted basis if the donee disposes of the property at a loss, and the fair
market value on the date of gift was less than the donor’s adjusted basis.

D.
Has no basis to the donee if the fair market value
on the date of gift is less than the donor’s adjusted basis.

E.
None of the above.

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82.
Shontelle received a gift of income-producing
property with an adjusted basis of $50,000 to the donor and fair market value
of $40,000 on the date of gift. Gift tax of $6,000 was paid by the donor.
Shontelle subsequently sold the property for $45,000. What is the recognized
gain or loss?

A.
$5,000.

B.
$4,000.
C.
($5,000).
D.
($11,000).
E.
None of the above.

83.
Rob was given a residence in 2010. At the time of
the gift, the residence had a fair market value of $200,000, and its adjusted
basis to the donor was $140,000. The donor paid a gift tax of $10,000 on the
taxable gift of $188,000. What is Rob’s basis for gain?

A.
$140,000.

B.
$143,209.
C.
$150,000.
D.
$200,000.
E.
None of the above.

84.
In addition to other gifts, Megan made a gift of
stock to Jeri in 1975. Megan had purchased the stock in 1973 for $5,000. At the
time of the gift, the stock was worth $7,500. If Megan paid $360 of gift tax on
the transaction in 1975, what is Jeri’s gain basis for the stock?

A.
$5,000.

B.
$5,120.
C.
$5,360.
D.
$7,860.
E.
None of the above.

85.
Noelle received dining room furniture as a gift
from her friend, Jane. Jane’s adjusted basis was $9,200 and the fair market
value on the date of the gift was $7,000. Noelle decided she did not need the
furniture and sold it to a neighbor six months later for $6,500. What is her
recognized gain or loss?

A.
$0.

B.
($500).
C.
($2,700).
D.
$6,500.
E.
None of the above.

86.
The
holding period of property acquired by gift may begin on:

A.
The
date the property was acquired by the donor only.
B.
The date of gift only.
C.
Either the date the property was acquired by the
donor or the date of gift.
D.
Only a. and c. are correct.
E.
a., b., and c. are correct.

87.
Melba gives her niece a drill press to use in her
business with a fair market value of $36,000 and a basis in Melba’s hands of
$41,000. What is the niece’s basis for depreciation (cost recovery)?

A.
$0.

B.
$5,000.
C.
$36,000.
D.
$41,000.
E.
None of the above.

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88.
Abner, age 80 and in poor health, owns investment
land with an adjusted basis of $50,000. He is considering transferring it to
Stella, his niece. Regarding Stella’s income tax position, should the transfer
to her be by gift or by inheritance? (Assume neither gift tax nor estate tax
would be due, and that the property is not expected to change in value.)

A.
If
the fair market value of the land is $200,000, the transfer should be by
inheritance.
B.
If the fair market value of the land is $10,000,
the transfer should be by gift.
C.
If the fair market value of the land is $50,000,
the transfer can be either by gift or by inheritance (i.e., the tax
consequences are the same).

D.
Only a. and c. are correct.
E.
a., b., and c. are correct.

89.
Which
of the following statements correctly reflects the rules regarding inherited
property?

A.
The
beneficiary’s basis can be greater than, equal to, or less than the decedent’s
basis.
B.
The beneficiary’s holding period includes the
donor’s holding period.
C.
The alternate valuation date election only applies
to those assets which have declined in value (i.e., does not cover assets that
have increased in value).

D.
Only a. and b. are correct.
E.
a., b., and c. are correct.

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