R. Davidson Tax 495/595 Planning problem #3 Due 6/7/16 Please answer the five questions below. Provide as much detail as possible (including code sections) as to how you reached your conclusion. 1) Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $105,000 and an adjusted basis of $85,000 to Kathleen's grandfather. The grandfather did not have any gift taxes due. One year later, Kathleen sold the land for $110,000. What was her gain or (loss) on this transaction? 2) Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4 of the current year. His father paid $30 per share for the stock on September 2, 2005. The FMV of the stock on the date of death was $50 per share. On September 4 this year, the FMV of the stock was $55 per share. The executor did not elect the alternate valuation date. Monte sold the stock for $65 per share on December 3. What is the amount and nature of any gain or loss? 3) Bob and Elizabeth, both 55 years old and married, sell their personal residence to Wolfgang. Wolfgang pays $660,000 and assumes their $90,000 mortgage. To make the sale they pay $20,000 in commissions and $10,000 in legal costs. They have owned and lived in the house for seven years and their tax basis is $200,000. What is the amount of gain realized and recognized on the sale? 4) Indicate with a "yes" or a "no" which of the following are like-kind exchanges (assume all assets are held for business or investment purposes). a. Exchange of common stock held as an investment for land held as an investment. b. Exchange of farmland for an apartment building. c. Exchange of office furniture used in trade or business for computer used in a trade or business d. Exchange of unimproved real estate for improved real estate. e. Exchange of automobile used in trade or business for office building used in trade or business 5) During the current year, a corporation sells equipment for $300,000. The equipment cost $270,000 when purchased and placed in service two years ago and $60,000 of depreciation deductions were allowed. The results of the sale are ordinary income of $________________ and section 1231 gain of $________________.