2. When a loss is disallowed between related parties (choose the best answer) a. It is possible that a portion of the loss will be lost forever b. All of the loss is always disallowed c. The donor (person making the gift) can take the disallowed loss when the person who received the gift sells the property d. The loss is only disallowed if you get audited. 3. On January 15, 2019 Cindy buys a truck owned by her company for $3,000.00. The company fair market value is $6,000.00. Circle the most correct answer below. a. Cindy has an new asset with a basis of $3,000.00 b. Cindy has income of $3,000 and a new asset with a basis of $3,000.00 c. Cindy has income of $3,000.00 and a new asset with a basis of $6,000.00 d Cindy has ordinary income of $3,000.00 4. Gift property (disregarding any adjustment for gift tax paid by the donor): a. Has no basis to the lone because he or she did not pay anything for the property b. Has the same basis to the tone as the donor's adjusted basis if the 1one disposes of the property at a gain c. Has the same basis to the tone as the donor's adjusted basis if the one 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 a zero basis to the tone if the fair market value on the date of gift is less than the donor's adjusted basis 5. Peter is the sole owner of Peter's Pix, Inc. - a guitar pick corporation. After thirty years in the business (some successful, some not), Peter considers liquidating the business. He decides he is not quite ready but figures it is a good time to take some of the accumulated cash out of the business. His balance sheets reflects that the corporation has accumulated earnings of $13,450.00 and his basis in the stock he holds to be $500.00. He has $60,000 in cash in the company and distributes $39,000.00 to himself. Below indicate the tax amounts (if any) for his dividend income from the corporation, his recovery of basis (if any) and gain/loss (if any) Indicate the answer choice that best completes the statement or answers the question 6. Sue and David are neighbors. And are both cash basis taxpayers. Sue purchased her home for $165,000 and David purchased his for $185,000.00. They are virtually identical except David's driveway/garage is a triple driveway/garage and Sue's is a single. Sue approaches David and requests to purchase a parking easement for one car on the part of his driveway closest to her home. Since David only uses that particular. bay of the garage for storage, he agrees to sell a temporary parking easement for 5 years, $5,000.00, paid in year one. David has an amount realized and recognized as follows: a $1,000 per year for 5 years b. $0.00 this transaction effects his basis not his income c. $5,000 in year one d. $5,000 long term capital gain because the payment is for use of real property over 1 year 9. On March 5, 2020, Ellen inherited a vacation home from her mother with a fair market value of $168,000.00. Since the market was hot, she immediately listed it for sale April and sold it for $178,000.00. In addition, the purchaser paid for the entire years real estate taxes at closing equal to $4,200.00. The amount accrued as of the date of closing was $1,000.00. Ellen had committed to pay the real estate agent $12,000 but due to a dispute the parties agreed to allow Ellen to pay $7,000.00. What is Ellen's amount realized and what is her gain or loss? 11. Jim owns 50 shares of Bluebird Corporation Common stock which he paid $550.00. He receives a 20% stock dividend at a time when the stock is worth $12.00/share. What is Jim's total shares owned after the dividend and basis per share after the dividend? 14. On December 12, 2019, Jerry received land and a building from James as a gift . James had purchased the land and building on March 5, 2017, and his adjusted basis and the fair market value at the date of the gift were as follows: Asset FMV Land Building Adjusted Basis $110,000 70,000 $200,000 100,000 Ted paid no Federal gift tax on the transfer a Determine Jerry's adjusted basis and holding period for the land and building Assume instead that the FMV of the land was $80,000 and the FMV of the building was $55,000. Determine Jerry's adjusted basis and holding period for the land and building. Must show work 17. George purchased 100 shares of Gold Corporation stock for $11,500 on January 2, 2020. During 2020, he sells 25 shares of the 100 shares purchased on January 2, 2020, for $2,500 Twenty-five days earlier, he had purchased 30 shares for $3,000. What is George's recognized gain or loss on the sale of the stock, and what is his basis in the 30 shares purchased 25 days earlier? a $375 recognized loss, $3,000 basis in new stock b. $0 recognized loss, $3,000 basis in new stock c. $0 recognized loss, $3,375 basis in new stock d. $0 recognized loss, $3.450 basis in new stock 20 Farmer George purchased 3 pieces of equipment from FarmCo, 2 tractors and a fertilizer. Each item had the following FMV: Tractor 1 $60,000.00, Tractor 2. 80,000 and the Fertilizer for $40,000.00. If Farmer George pays a lump sum purchase of $140,000.00, what is his basis in each piece of equipment? 22. In determining if a gain/loss is long-term or short-term you the day of the purchase in the count of days and the day of the sale or exchange in the count 1 2. When a loss is disallowed between related parties (choose the best answer) a. It is possible that a portion of the loss will be lost forever b. All of the loss is always disallowed c. The donor (person making the gift) can take the disallowed loss when the person who received the gift sells the property d. The loss is only disallowed if you get audited. 3. On January 15, 2019 Cindy buys a truck owned by her company for $3,000.00. The company fair market value is $6,000.00. Circle the most correct answer below. a. Cindy has an new asset with a basis of $3,000.00 b. Cindy has income of $3,000 and a new asset with a basis of $3,000.00 c. Cindy has income of $3,000.00 and a new asset with a basis of $6,000.00 d Cindy has ordinary income of $3,000.00 4. Gift property (disregarding any adjustment for gift tax paid by the donor): a. Has no basis to the lone because he or she did not pay anything for the property b. Has the same basis to the tone as the donor's adjusted basis if the 1one disposes of the property at a gain c. Has the same basis to the tone as the donor's adjusted basis if the one 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 a zero basis to the tone if the fair market value on the date of gift is less than the donor's adjusted basis 5. Peter is the sole owner of Peter's Pix, Inc. - a guitar pick corporation. After thirty years in the business (some successful, some not), Peter considers liquidating the business. He decides he is not quite ready but figures it is a good time to take some of the accumulated cash out of the business. His balance sheets reflects that the corporation has accumulated earnings of $13,450.00 and his basis in the stock he holds to be $500.00. He has $60,000 in cash in the company and distributes $39,000.00 to himself. Below indicate the tax amounts (if any) for his dividend income from the corporation, his recovery of basis (if any) and gain/loss (if any) Indicate the answer choice that best completes the statement or answers the question 6. Sue and David are neighbors. And are both cash basis taxpayers. Sue purchased her home for $165,000 and David purchased his for $185,000.00. They are virtually identical except David's driveway/garage is a triple driveway/garage and Sue's is a single. Sue approaches David and requests to purchase a parking easement for one car on the part of his driveway closest to her home. Since David only uses that particular. bay of the garage for storage, he agrees to sell a temporary parking easement for 5 years, $5,000.00, paid in year one. David has an amount realized and recognized as follows: a $1,000 per year for 5 years b. $0.00 this transaction effects his basis not his income c. $5,000 in year one d. $5,000 long term capital gain because the payment is for use of real property over 1 year 9. On March 5, 2020, Ellen inherited a vacation home from her mother with a fair market value of $168,000.00. Since the market was hot, she immediately listed it for sale April and sold it for $178,000.00. In addition, the purchaser paid for the entire years real estate taxes at closing equal to $4,200.00. The amount accrued as of the date of closing was $1,000.00. Ellen had committed to pay the real estate agent $12,000 but due to a dispute the parties agreed to allow Ellen to pay $7,000.00. What is Ellen's amount realized and what is her gain or loss? 11. Jim owns 50 shares of Bluebird Corporation Common stock which he paid $550.00. He receives a 20% stock dividend at a time when the stock is worth $12.00/share. What is Jim's total shares owned after the dividend and basis per share after the dividend? 14. On December 12, 2019, Jerry received land and a building from James as a gift . James had purchased the land and building on March 5, 2017, and his adjusted basis and the fair market value at the date of the gift were as follows: Asset FMV Land Building Adjusted Basis $110,000 70,000 $200,000 100,000 Ted paid no Federal gift tax on the transfer a Determine Jerry's adjusted basis and holding period for the land and building Assume instead that the FMV of the land was $80,000 and the FMV of the building was $55,000. Determine Jerry's adjusted basis and holding period for the land and building. Must show work 17. George purchased 100 shares of Gold Corporation stock for $11,500 on January 2, 2020. During 2020, he sells 25 shares of the 100 shares purchased on January 2, 2020, for $2,500 Twenty-five days earlier, he had purchased 30 shares for $3,000. What is George's recognized gain or loss on the sale of the stock, and what is his basis in the 30 shares purchased 25 days earlier? a $375 recognized loss, $3,000 basis in new stock b. $0 recognized loss, $3,000 basis in new stock c. $0 recognized loss, $3,375 basis in new stock d. $0 recognized loss, $3.450 basis in new stock 20 Farmer George purchased 3 pieces of equipment from FarmCo, 2 tractors and a fertilizer. Each item had the following FMV: Tractor 1 $60,000.00, Tractor 2. 80,000 and the Fertilizer for $40,000.00. If Farmer George pays a lump sum purchase of $140,000.00, what is his basis in each piece of equipment? 22. In determining if a gain/loss is long-term or short-term you the day of the purchase in the count of days and the day of the sale or exchange in the count 1