federal Tax

please answer all question. it is one big question.

Please read the questions below wery carefully and provide or select the best answer based on the facts provided. Remember that the best (correct) answer may have to be separated into components. Unless otherwise instructed, you may assume that all characters are U.S. citizens and cash method taxpayers. 1-29. Danson works at the local bowling alley. The bowling alley has a very special bowling ball (the "Billy Bones Bowling Ball," or the "Ball") on display behind the counter. The great and very famous bowler Billy Bones once owned the Ball (it is even autographed by Billy himself). Danson's boss Andy, the Ball's current owner, purchased the Billy Bones Bowling Ball at a garage sale from a legally blind old man for $20. The Ball's fair market value at the time Andy bought it was $9,433. Andy knew what the Ball's fair market value was, but didn't let on at all (he wasn't sure if the old man was really blind). Danson is what you might call a disgruntled employee. So one day when he is cleaning up after closing, Danson decides to take the Ball for himself (he steals it). Danson takes the bowling ball home and puts it on display with his other treasured possessions. On the day Danson steals the bowling ball (December 11 , 2017) the bowling ball's fair market value is $25,000. Danson does not report the value of the Ball on his 2017 federal income tax return (he would have, but there was no line for stolen bowling balls on the return). Danson is what you might call a disgruntled employee. So one day when he is cleaning up after closing, Danson decides to take the Ball for himself (he steals it). Danson takes the bowling ball home and puts it on display with his other treasured possessions. On the day Danson steals the bowling ball (December 11, 2017) the bowling ball's fair market value is $25,000. Danson does not report the value of the Ball on his 2017 federal income tax return (he would have, but there was no line for stolen bowling balls on the return). Now begins a series of unfortunate events. One day in early 2018 (February 18, 2018) Danson attends a Beta Alpha Crybaby party. Danson likes to show off a bit, so he took the Ball with him to the party. While driving home from the party, Danson is stopped by a policeman (you guessed it, "dirty" Harry Callahan). Danson had been drinking a bit (Okay, a lot. But before he left the party he drank a Red Bull, took a five hour energy, and had a breath mint, so he thought he'd be okay). So when Harry stops Danson, Danson is off the charts on the Breathalyzer (even with the breath mint ... ). Harry demands a gift of $50,000 or he will have to arrest Danson. Danson doesn't have $50,000, so he offers to give Harry the Ball instead of the $50,000. Danson knows that the Ball's fair market value at that time is $300,000 (Billy Bones has recently been inducted into the semi-professional bowlers hall of fame), but he really doesn't want to get arrested, Harry, who is an avid bowler and a big fan of Billy Bones, accepts at once. He takes the Ball and since Danson is in no condition to drive, Harry drives Danson home. On April 16, 2018 Harry is on patrol when he is confronted by some aliens. They land their spaceship in front of Harry's patrol car and force him to stop. The aliens are just about to abduct Harry for some scientifi experiments when they see the Ball, which Harry keeps with him on patrol for good luck. The aliens are so fascinated with the Ball that they ask Harry if he will trade the ball for their spaceship (apparently these aliens speak perfect English). Harry really likes the Ball and doesn't want to trade, but he doesn't seem to have any choice. Harry is a bit greedy so he asks the aliens to throw in a ray gun too. The aliens agree (ray guns are a dime a dozen where they come from), so Harry enters into the Ball-for-spaceship-and-ray gun exchange. The spaceship has a $3,000,000 fair market value at the time of the exchange. The ray gun has a $44,000 fair market value at the time of the exchange. Harry immediately begins using the spaceship and ray gun for personal purposes. Harry, who is 24 years old, is tired of being a cop, so he retires (with full benefits) to start a business giving spaceship rides to wealthy tourists. On November 15,2018 . Harry places the spaceship in service in his business. On November 15,2018 the spaceship has a $2,600,000 fair market value (the market is down .. .). Harry doesn't place any other property in service in his business in 2018 and doesn't elect any $179 or bonus deprecation deduction with respect to the spaceship. The spaceship is 7-year MACRS property. On April 30, 2019 Harry, who is concerned about personal liability, transfers the spaceship to SpacedOutCo, On April 30, 2019 Harry, who is concerned about personal liability, transfers the spaceship to SpacedOutCo, a subchapter C corporation of which Harry is the 80% owner. The spaceship's fair market value on the date of the exchange is $3,200,000. Harry receives additional SpacedOutCo stock and tickets to a Wayne Newton concert in Las Vegas (FMV $11,000,AB$6,000 ). 1. How much, if any, income does Andy realize when he purchases the Ball? 2. How much, if any, income does Andy recognize when he purchases the Ball? 3. What is the character, if any, of Andy's recognized income? 4. What is Andy's basis in the Ball? 5. How much, if any, income does Danson realize when he steals the Ball? 6. How much, if any, income does Danson recognize when he steals the Ball? 7. What is the character, if any, of Danson's recognized income? 8. What is Danson's basis in the Ball? 9. How much, if any, income does Danson realize when he transfers the Ball to Harry? 10. How much, if any, income does Danson recognize when he transfers the Ball to Harry? 11. What is the chamcter if ansk of Danson's recognized income? 11. What is the character, if any, of Danson's recognized income? 12. How much, if any, income does Harry realize when he receives the Ball? 13. How much, if any, income does Harry recognize when he receives the Ball? 14. What is the character, if any, of Harry's recognized income? 15. What is Harry's basis in the Ball? 16. How much, if any, gain or loss does Harry realize when he exchanges the Ball for the spaceship and ray gun? 17. How much, if any, gain or loss does Harry recognize when he exchanges the Ball for the spaceship and ray gun? 18. What is the character, if any, of Harry's recognized gain or loss? 19. What is Harry's basis in the spaceship? 20. What is Harry's basis in the ray gun? 21. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2016? 22. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2017 ? 23. How much, if any, gain or loss does Harry realize when he transfers the spaceship to SpacedOutCo? 24. How much, if any, gain or loss does Harry recognize when he transfers the spaceship to SpacedOutCo? 16. H gun? gun? 17. How much, if any, gain or loss does Harry recognize when he exchanges the Ball for the spaceship and ray gun? 18. What is the character, if any, of Harry's recognized gain or loss? 19. What is Harry's basis in the spaceship? 20. What is Harry's basis in the ray gun? 21. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2016 ? 22. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2017? 23. How much, if any, gain or loss does Harry realize when he transfers the spaceship to SpacedOutCo? 24. How much, if any, gain or loss does Harry recognize when he transfers the spaceship to SpacedOutCo? 25. What is the character, if any, of Harry's recognized gain or loss? 26. What is Harry's basis in the SpacedOutCo stock? 27. What is Harry's basis in the Wayne Newton tickets? 28. When does Harry's holding period for the SpacedOutCo stock begin? 29. What is SpacedOutCo's basis in the spaceship? Please read the questions below wery carefully and provide or select the best answer based on the facts provided. Remember that the best (correct) answer may have to be separated into components. Unless otherwise instructed, you may assume that all characters are U.S. citizens and cash method taxpayers. 1-29. Danson works at the local bowling alley. The bowling alley has a very special bowling ball (the "Billy Bones Bowling Ball," or the "Ball") on display behind the counter. The great and very famous bowler Billy Bones once owned the Ball (it is even autographed by Billy himself). Danson's boss Andy, the Ball's current owner, purchased the Billy Bones Bowling Ball at a garage sale from a legally blind old man for $20. The Ball's fair market value at the time Andy bought it was $9,433. Andy knew what the Ball's fair market value was, but didn't let on at all (he wasn't sure if the old man was really blind). Danson is what you might call a disgruntled employee. So one day when he is cleaning up after closing, Danson decides to take the Ball for himself (he steals it). Danson takes the bowling ball home and puts it on display with his other treasured possessions. On the day Danson steals the bowling ball (December 11 , 2017) the bowling ball's fair market value is $25,000. Danson does not report the value of the Ball on his 2017 federal income tax return (he would have, but there was no line for stolen bowling balls on the return). Danson is what you might call a disgruntled employee. So one day when he is cleaning up after closing, Danson decides to take the Ball for himself (he steals it). Danson takes the bowling ball home and puts it on display with his other treasured possessions. On the day Danson steals the bowling ball (December 11, 2017) the bowling ball's fair market value is $25,000. Danson does not report the value of the Ball on his 2017 federal income tax return (he would have, but there was no line for stolen bowling balls on the return). Now begins a series of unfortunate events. One day in early 2018 (February 18, 2018) Danson attends a Beta Alpha Crybaby party. Danson likes to show off a bit, so he took the Ball with him to the party. While driving home from the party, Danson is stopped by a policeman (you guessed it, "dirty" Harry Callahan). Danson had been drinking a bit (Okay, a lot. But before he left the party he drank a Red Bull, took a five hour energy, and had a breath mint, so he thought he'd be okay). So when Harry stops Danson, Danson is off the charts on the Breathalyzer (even with the breath mint ... ). Harry demands a gift of $50,000 or he will have to arrest Danson. Danson doesn't have $50,000, so he offers to give Harry the Ball instead of the $50,000. Danson knows that the Ball's fair market value at that time is $300,000 (Billy Bones has recently been inducted into the semi-professional bowlers hall of fame), but he really doesn't want to get arrested, Harry, who is an avid bowler and a big fan of Billy Bones, accepts at once. He takes the Ball and since Danson is in no condition to drive, Harry drives Danson home. On April 16, 2018 Harry is on patrol when he is confronted by some aliens. They land their spaceship in front of Harry's patrol car and force him to stop. The aliens are just about to abduct Harry for some scientifi experiments when they see the Ball, which Harry keeps with him on patrol for good luck. The aliens are so fascinated with the Ball that they ask Harry if he will trade the ball for their spaceship (apparently these aliens speak perfect English). Harry really likes the Ball and doesn't want to trade, but he doesn't seem to have any choice. Harry is a bit greedy so he asks the aliens to throw in a ray gun too. The aliens agree (ray guns are a dime a dozen where they come from), so Harry enters into the Ball-for-spaceship-and-ray gun exchange. The spaceship has a $3,000,000 fair market value at the time of the exchange. The ray gun has a $44,000 fair market value at the time of the exchange. Harry immediately begins using the spaceship and ray gun for personal purposes. Harry, who is 24 years old, is tired of being a cop, so he retires (with full benefits) to start a business giving spaceship rides to wealthy tourists. On November 15,2018 . Harry places the spaceship in service in his business. On November 15,2018 the spaceship has a $2,600,000 fair market value (the market is down .. .). Harry doesn't place any other property in service in his business in 2018 and doesn't elect any $179 or bonus deprecation deduction with respect to the spaceship. The spaceship is 7-year MACRS property. On April 30, 2019 Harry, who is concerned about personal liability, transfers the spaceship to SpacedOutCo, On April 30, 2019 Harry, who is concerned about personal liability, transfers the spaceship to SpacedOutCo, a subchapter C corporation of which Harry is the 80% owner. The spaceship's fair market value on the date of the exchange is $3,200,000. Harry receives additional SpacedOutCo stock and tickets to a Wayne Newton concert in Las Vegas (FMV $11,000,AB$6,000 ). 1. How much, if any, income does Andy realize when he purchases the Ball? 2. How much, if any, income does Andy recognize when he purchases the Ball? 3. What is the character, if any, of Andy's recognized income? 4. What is Andy's basis in the Ball? 5. How much, if any, income does Danson realize when he steals the Ball? 6. How much, if any, income does Danson recognize when he steals the Ball? 7. What is the character, if any, of Danson's recognized income? 8. What is Danson's basis in the Ball? 9. How much, if any, income does Danson realize when he transfers the Ball to Harry? 10. How much, if any, income does Danson recognize when he transfers the Ball to Harry? 11. What is the chamcter if ansk of Danson's recognized income? 11. What is the character, if any, of Danson's recognized income? 12. How much, if any, income does Harry realize when he receives the Ball? 13. How much, if any, income does Harry recognize when he receives the Ball? 14. What is the character, if any, of Harry's recognized income? 15. What is Harry's basis in the Ball? 16. How much, if any, gain or loss does Harry realize when he exchanges the Ball for the spaceship and ray gun? 17. How much, if any, gain or loss does Harry recognize when he exchanges the Ball for the spaceship and ray gun? 18. What is the character, if any, of Harry's recognized gain or loss? 19. What is Harry's basis in the spaceship? 20. What is Harry's basis in the ray gun? 21. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2016? 22. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2017 ? 23. How much, if any, gain or loss does Harry realize when he transfers the spaceship to SpacedOutCo? 24. How much, if any, gain or loss does Harry recognize when he transfers the spaceship to SpacedOutCo? 16. H gun? gun? 17. How much, if any, gain or loss does Harry recognize when he exchanges the Ball for the spaceship and ray gun? 18. What is the character, if any, of Harry's recognized gain or loss? 19. What is Harry's basis in the spaceship? 20. What is Harry's basis in the ray gun? 21. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2016 ? 22. How much, if any, deprecation may Harry deduct with respect to the spaceship in 2017? 23. How much, if any, gain or loss does Harry realize when he transfers the spaceship to SpacedOutCo? 24. How much, if any, gain or loss does Harry recognize when he transfers the spaceship to SpacedOutCo? 25. What is the character, if any, of Harry's recognized gain or loss? 26. What is Harry's basis in the SpacedOutCo stock? 27. What is Harry's basis in the Wayne Newton tickets? 28. When does Harry's holding period for the SpacedOutCo stock begin? 29. What is SpacedOutCo's basis in the spaceship