Question: On April 3 2010 Arlene sells land that she holds
On April 3, 2010, Arlene sells land that she holds as an investment to a construction company. The deed conveying the land to the construction company contains a covenant restricting construction on the land to single-family residences. The market for apartment buildings picks up in 2011, and the construction company pays Arlene $5,000 on August 10, 2011, to release the restrictive covenant so that it can build apartments on the land. Determine the income tax treatment of the $5,000 payment Arlene receives for the release of the restrictive covenant.
Relevant QuestionsExplain the role an asset's initial basis plays in determining the income to be recognized upon disposal of the asset.A person who receives property as a gift makes no investment to receive the property. Why is a basis assignment to the gift property necessary even though the donee has no investment in the property?For each of the following assets, determine whether it is personal property, real property, intangible property, or personal use property:a. Reagan gave her mother a new set of golf clubs for Christmas.b. Roberta bought a ...During the current year, Horace's personal residence is damaged by a tornado. The residence had an adjusted basis of $80,000 before the tornado. The cost of repairing the damage is $30,000. Horace's insurance company ...Taxpayers can structure transactions through third parties that qualify as like-kind exchanges if certain time requirements for identifying the properties and closing the transaction are met. This type of exchange is ...
Post your question