Julie and Harold Jones have been clients of our firm for three years now. Harold was raised in St. Louis, and moved to Chapel Hill in 1999 to take a job at UNC-CH. Julie was raised in Austin, Texas, and received her Ph.D. from the University of Texas in 2006. At that time, she accepted a job with UNC-Charlotte. Julie and Harold met five years ago when Julie moved to Raleigh, and they got married three years ago.

Julie is a marketing professor. She has agreed to teach online marketing courses in Fall 2019 as an adjunct professor at Sarasota Management Institute (SMI), a new school specializing in teaching its students business management. SMI and Julie have agreed that Julie will teach approximately 6 to 10 online marketing courses for SMI each year and that they will enter into a separate contract for each course. Each course will last 10 weeks, and SMI will pay Julie $7,500 for each course. For each course, SMI will provide an outline of the material to be covered, and Julie will use the outline to create her course syllabus. Julie will set her own work hours and will record and upload her online classes for student viewing according to her own schedule, but within certain timing requirements set by SMI (so that students can view the classes by set days and times). SMI will provide the website used for the course and will register and enroll SMI students in the course. Julie will provide SMI with a copy of her course syllabus and the students grades at the end of each course.

Harold is an employee of DotGismo, Inc., a privately held firm. On January 15, 2017. Harold was allowed to buy 20,000 shares of DotGismo stock for $40,000 dollars. At that time when he bought the stock, each share was worth $2. DotGismo retained the right to repurchase each share for $2 original purchase price if Harold left DotGismo at any time during the next two years for any reason. DotGismo stock increased to $5 per share by January 15, 2019, when the two year restriction ended. Harold sold the stock on February 18, 2019 for $9 per share, after the announcement of a new patent for DotGismo.

The Bauers owned 100 acres of land located near Charlotte, North

Carolina. The land was located in an area where a great number of new houses and other buildings were being built.

The Bauers purchased the land several years ago as an investment. They intended to sell the land at a profit a few

years later, when less undeveloped land would be available in this high demand area. In April of last year, the Bau-

ers learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the

area where their land was located. As lifelong theatre goers, the Bauers wanted to help CTC, which is a 501(c)(3)

charitable organization. They agreed to give the 100 acres of land to CTC. The Bauers transferred the land to CTC

on June 30th of last year. At the time of the transfer, the land had a fair market value of $500,000 and was subject to

a $200,000 mortgage, and the Bauers adjusted basis in the land was $300,000.

The Bauers owned 100 acres of land located near Charlotte, North

Carolina. The land was located in an area where a great number of new houses and other buildings were being built.

The Bauers purchased the land several years ago as an investment. They intended to sell the land at a profit a few

years later, when less undeveloped land would be available in this high demand area. In April of last year, the Bau-

ers learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the

area where their land was located. As lifelong theatre goers, the Bauers wanted to help CTC, which is a 501(c)(3)

charitable organization. They agreed to give the 100 acres of land to CTC. The Bauers transferred the land to CTC

on June 30th of last year. At the time of the transfer, the land had a fair market value of $500,000 and was subject to

a $200,000 mortgage, and the Bauers adjusted basis in the land was $300,000.

The Bauers owned 100 acres of land located near Charlotte, North

Carolina. The land was located in an area where a great number of new houses and other buildings were being built.

The Bauers purchased the land several years ago as an investment. They intended to sell the land at a profit a few

years later, when less undeveloped land would be available in this high demand area. In April of last year, the Bau-

ers learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the

area where their land was located. As lifelong theatre goers, the Bauers wanted to help CTC, which is a 501(c)(3)

charitable organization. They agreed to give the 100 acres of land to CTC. The Bauers transferred the land to CTC

on June 30th of last year. At the time of the transfer, the land had a fair market value of $500,000 and was subject to

a $200,000 mortgage, and the Bauers adjusted basis in the land was $300,000.

The Bauers owned 100 acres of land located near Charlotte, North

Carolina. The land was located in an area where a great number of new houses and other buildings were being built.

The Bauers purchased the land several years ago as an investment. They intended to sell the land at a profit a few

years later, when less undeveloped land would be available in this high demand area. In April of last year, the Bau-

ers learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the

area where their land was located. As lifelong theatre goers, the Bauers wanted to help CTC, which is a 501(c)(3)

charitable organization. They agreed to give the 100 acres of land to CTC. The Bauers transferred the land to CTC

on June 30th of last year. At the time of the transfer, the land had a fair market value of $500,000 and was subject to

a $200,000 mortgage, and the Bauers adjusted basis in the land was $300,000.

The Bauers owned 100 acres of land located near Charlotte, North

Carolina. The land was located in an area where a great number of new houses and other buildings were being built.

The Bauers purchased the land several years ago as an investment. They intended to sell the land at a profit a few

years later, when less undeveloped land would be available in this high demand area. In April of last year, the Bau-

ers learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the

area where their land was located. As lifelong theatre goers, the Bauers wanted to help CTC, which is a 501(c)(3)

charitable organization. They agreed to give the 100 acres of land to CTC. The Bauers transferred the land to CTC

on June 30th of last year. At the time of the transfer, the land had a fair market value of $500,000 and was subject to

a $200,000 mortgage, and the Bauers adjusted basis in the land was $300,000.

Julie owns 100 acres of land near Charlotte, that she purchased several years ago as an investment. The land was located in an area where a great number of new houses and other buildings were being built. She intended to sell the land at a profit a few years later, when less undeveloped land would be available in this high-demand area. In April of this year, Julie learned that the Charlotte Theatre Company (CTC) wanted to build a new theatre building and school in the area where her land is located. As a lifelong theatre goer, Julie wanted to help CTC, which is a 501(c)(3) charitable organization. Julie transferred the 100 acres of land to CTC on June 30^th. At the time of the transfer, the land had a fair market value of $500,000 and was subject to a $200,000 mortgage, and Julies adjusted basis in the land was $300,000.

Assignment:

Julie and Harold have come to our firm for some tax advice related to the recent events described above. Using only the primary resources available through RIA Checkpoint, write a memo that addresses the issues and the related relevant facts, the tax authorities that apply to the issues, and the conclusions that you would reach. There are three issues one is not income tax related and the other 2 are income tax related.