chapter 5

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33. tracy owns a nondepreciable capital asset held for investment. the asset was purchased for $250,000 six years earlier and is now subject to a $75,000 liability. during the current year, tracy transfers the asset to tim in exchange for $94,000 cash and a new automobile with a $50,000 fmv to be used by tracy for personal use; tim assumes the $75,000 liability. determine the amount of tracy's ltcg or ltcl.
34. doug receives a duplex as a gift from his uncle. the uncle's basis for the duplex and land is $90,000. at the time of the gift, the land and building have fmv's of $40,000 and $80,000, repectively. no gift tax is paid by doug's uncle at the time of the gift.
a. to determine gain, what is doug's basis for the land?
b. to determine gain, what is doug's basis for the building?
c. will the basis of the land and building be the same as in parts a and b for purpose of determining a loss?
36. bud received 200 shares of georgia corporation stock from his uncle as a gift on july 20, 2008, when the stock had a $45,000 fmv. the uncle paid $30,000 for the stock on april 12, 1998. the taxable gift was $45,000, because his uncle made another gift to bud for $20,000 in january. the uncle paid a gift tax of $1,500. without considering the transactions below, bud's agi is $45,000 in 2009. no other transactions involving capital assets occur during the year. analyze each transaction below, independent of the others, and determine bud's agi in each case.
a. he sells the stock on october 12, 2009, for $48,000.
b. he sells the stock on october 12, 2009, for $28,000.
c. he sells the stock on december 16, 2009, for #42,000.
42. beth acquired only one tract of land seven years ago as an investment. in order to sell the land at a higher price, she decides to subdivide it into 20 lots. she pays for improvements such as clearing and leveling, but the improvements are not considered to be substantial. each lot has a basis of $2,000, and a selling price of $6,000. selling expenses of $480 were incurred to sell two lots last year. this year, ten lots are sold, and selling expenses amount to $1,900. how much ordinary income and capital gain must be recognized in the prior and current year?
45. donna files as a head of household in 2009 and has taxable income of $90,000. including the sale of a stock held as an investment for two years at a gain of $20,000. only one asset was sold during the year and donna does not have any capital loss carryovers.
a. what is the amount of donna's tax liability?'
b. what is the amount of donna's tax liability if the stock is held for 11 months?
48. consider the four independent situations below for an unmarried individual, and analyze the effects of the capital gains and losses on the individual's agi. for each case, determine agi after considering the capital gains and losses.
situation 1
agi (excluding property transactions $40,000
stcg 6,000
stcl 2,000
ltcg 3,500
ltcl 2,500
situation 2
agi (excluding property transactions $50,000
stcg 2,000
stcl 5,000
ltcg 15,000
ltcl 4,000
situation 3
agi (excluding property transactions $60,000
stcg 5,000
stcl 4,000
ltcg 10,000
ltcl 12,000
situation 4
agi (excluding property transactions $70,000
stcg 6,000
stcl 15,000
ltcg 9,000
ltcl 4,000
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