Refer to the Ethics & Equity information reflected on page 14-6 of the textbook. Prepare a discussion board post commenting on your evaluation of Cynthia's actions. Your discussion will include references to outside information as necessary. You should also respond to two other discussion board responses.
Topic: Week 13 Discussion Boa x C Get Homework Help With Che X C Chegg eReader GRefer to "The Big Picture" at th x G Refer to the "Ethics & Equity" + C chegg.com/reader/9780357109700/663/ : Search keywords, chapter or page # a If the son inherits the song from Isabella, his basis for the song is its fair market value at Isabella's death. In this situation, the song is a capital asset because the son's basis is not related to Isabella's basis for the song. ETHICS & EQUITY Sculpture as a Capital Asset Cynthia is a successful sculptor who created a work that is now worth $400,000 and has no tax basis. Cynthia forms a corporation and contributes the sculpture to it in exchange for the corporation's shares. Fourteen months later, she sells all the stock for $400,000. She wants to treat the sale of the stock as a long-term capital gain. Evaluate the propriety of Cynthia's actions. U.S. Government Publications U.S. government publications received from the U.S. government (or its agencies) for a reduced price are not capital assets. This prevents a taxpayer from later donating the publications to charity and claiming a charitable contribution deduction equal to the fair market value of the publications. Normally, the charitable contribution of an ordinary asset provides a deduction equal to the asset's basis. If the taxpayer received the property at no cost, its basis is equal to zero. If this property is given to someone else, it retains its ordinary asset status (see text Section 10-4e for more about property contributions) 14-2b Effect of Judicial Action Because the Code only lists categories of what are not capital assets, judicial inter- pretation is sometimes required to determine whether a specific item fits into one of those categories. The Supreme Court follows a literal interpretation of the catego- ries. For instance, because corporate stock is not mentioned in 1221, it is usually a capital asset. However, what if corporate stock is purchased for resale to custom- ers? Then it is inventory (and not a capital asset) because inventory is one of the Topic: Week 13 Discussion Boa x C Get Homework Help With Che X C Chegg eReader GRefer to "The Big Picture" at th x G Refer to the "Ethics & Equity" + C chegg.com/reader/9780357109700/663/ : Search keywords, chapter or page # a If the son inherits the song from Isabella, his basis for the song is its fair market value at Isabella's death. In this situation, the song is a capital asset because the son's basis is not related to Isabella's basis for the song. ETHICS & EQUITY Sculpture as a Capital Asset Cynthia is a successful sculptor who created a work that is now worth $400,000 and has no tax basis. Cynthia forms a corporation and contributes the sculpture to it in exchange for the corporation's shares. Fourteen months later, she sells all the stock for $400,000. She wants to treat the sale of the stock as a long-term capital gain. Evaluate the propriety of Cynthia's actions. U.S. Government Publications U.S. government publications received from the U.S. government (or its agencies) for a reduced price are not capital assets. This prevents a taxpayer from later donating the publications to charity and claiming a charitable contribution deduction equal to the fair market value of the publications. Normally, the charitable contribution of an ordinary asset provides a deduction equal to the asset's basis. If the taxpayer received the property at no cost, its basis is equal to zero. If this property is given to someone else, it retains its ordinary asset status (see text Section 10-4e for more about property contributions) 14-2b Effect of Judicial Action Because the Code only lists categories of what are not capital assets, judicial inter- pretation is sometimes required to determine whether a specific item fits into one of those categories. The Supreme Court follows a literal interpretation of the catego- ries. For instance, because corporate stock is not mentioned in 1221, it is usually a capital asset. However, what if corporate stock is purchased for resale to custom- ers? Then it is inventory (and not a capital asset) because inventory is one of the
