1. In the current year, Debbie receives stock as a gift from her uncle, Jerry. Jerry had originally purchased the stock for $27,000 several years ago. At the time of the gift, the fair market value of the stock is $17,000. One month later Debbie sells the stock for $16,500. What is the amount and character of Debbie’s recognized gain or loss from the sale?

• Now, assume instead that one month later Debbie sells the stock for $30,500. What is the amount and character of Debbie’s recognized gain or loss from the sale?

• Now, assume instead that Debbie holds on to the stock for another year and sells it for $20,000. What is the amount and character of Debbie’s recognized gain or loss from the sale

2. Faith inherits a parcel of land from her father on February 15, 2019. Her father had purchased the land on August 25, 1970 and his basis in the land was $325,000. The fair market value of the land at the date of death is $1,100,000. Faith sells the land on December 15, 2019 for $1,500,000. Assuming Faith held the land for investment, what is the amount and character of Faith’s recognized gain or loss on the sale?

• Would your answer change if the father’s basis in the land was greater than the FMV on the date of death?

3. Frank purchased a warehouse for personal use in July 2015 for $120,000. In August 2018 he decided to use the warehouse for business purposes and converted it to business-use when the fair market value was $85,000. On December 15, 2021, Frank sells the building for $60,000. At the time of the sale he had recorded $7,125 of accumulated depreciation. What is Frank’s recognized gain or loss on the sale of the warehouse?

• Now assume instead that Frank sold the building for $120,000. What is Frank’s recognized gain or loss on the sale of the warehouse?

• Now, assume instead the Frank sold the building for $90,000. What is Frank’s recognized gain or loss on the sale of the warehouse?