5) In October of 2017, Tommy and Tammy, husband and wife, sold for $940,000 their (only) residence that they had purchased in 1999 for $400,000 paying $300,000 in cash with a $100,000 mortgage from ABC Bank. They lived there the entire time they owned the home, and they made repairs to the electric and plumbing during their 10-year ownership totaling $40,000. What, if any, is their recognized gain or loss to be included on their jointly filed Form 1040 for 2017?

a. $400,000

b. $0

c. $500,000

d. $40,000

e. None of the above is correct.

6) Henrietta exchanged real property held for investment with a basis of $100,000 and a fair market value of $125,000 for other real property with a fair market value of $160,000 owned by Harry that Henrietta planned to hold for investment. She also transferred to Harry 100 shares of Piano, Inc. stock worth $25,000 with an adjusted basis of $15,000. Harrys basis in his property was $200,000. How much is Henriettas realized gain and her recognized gain?

a. Realized gain: $10,000; Recognized gain: $10,000

b. Realized gain: $10,000; Recognized gain: $0

c. Realized gain: $45,000; Recognized gain: $10,000

d. Realized gain: $45,000; Recognized gain: $0

7) Based on the facts in question 6, how much gain or loss is recognized by Harry?

a. Recognized gain or loss: $0

b. Recognized gain: $10,000

c. Recognized gain: $25,000

d. Recognized loss of $25,000

e. None of the above is the correct answer

Charlie owns a tract of undeveloped land held as an investment that has an adjusted basis to Charlie of $145,000. If Charlie sells the land to his son, Otis, for $105,000, the fair market value of the property, which of the following is a correct statement as to Otis basis in the land?

a. Otis basis in the land is $105,000.

b. Otis basis in the land is $105,000 provided that Otis does not sell the land within two years after the date that the land is transferred to Otis.

c. Otiss basis in the land is $145,000.

d. None of the above is correct since this transfer is considered part gift part sale

Charlie owns a tract of undeveloped land (adjusted basis of $145,000) which he sold to his son, Otis, for its fair market value of $105,000. What was Charlies recognized gain or loss and what is Otis basis in the land, respectively?

a. $0 and $105,000, respectively

b. $0 and $145,000, respectively

c. ($40,000) and $105,000, respectively

d. ($40,000) and $145,000, respectively

e. None of the above i

Sally, mother of Tally and Wally, owned 100 acres of undeveloped land when she died on October 1, 2012. Sally had acquired the land in 1978 for $20,000. Sallys Will was admitted to probate, and the Will specifically devised the 100 acres of undeveloped land to Sallys children Tally and Wally, as tenants in common. No estate tax return was required to be filed but several appraisals were acquired which all concluded that the fair market value as of the date of Sallys death was $300,000. Tally and Wally both survived Sally, and the land was distributed to Tally and Wally in 2013 when the property was still worth $300,000. Tally and Wally did not make any improvements to the land, and in 2018, Wally transferred Wallys undivided one-half interest as tenant-in-common to Tally. At the date of the transfer to Tally, the fair market value of Wallys undivided one-half interest as tenant in common was $800,000. After the transfer, how much is Tallys basis in the 100 acres of undeveloped land?

a. $300,000

b. $550,000

c. $950,000

d. $325,000

On December 15, 2017 Ralph gave his daughter, Barbara, stock that had an adjusted basis to Ralph of $8,000 and a fair market value on the date of the transfer of $6,000). Ralph paid a gift tax attributable to this transfer. Barbara sold the stock on June 19, 2018 for $10,000. How much was Barbaras recognized gain and the character of the gain?

a. $2,000 short-term capital gain

b. $2,000 long-term capital gain

c. $4,000 ordinary income

d. $4,000 short-term capital gain

e. We need to know the amount of the gift tax paid by Ralph in order to answer this question.