Martin Forest has owned a tract of land for over 10 years. He acquired the land at
Question:
Martin Forest has owned a tract of land for over 10 years. He acquired the land at a cost of $360,000. An appraiser has advised him that the land has a current fair market value of $500,000. It is Martin's intention to sell the land.
The following four Cases make different assumptions as to the identity of the purchaser and the proceeds of disposition.
Case 1 Martin sells the land to an arm's length party for $500,000.
Case 2 Martin sells the land to his sister for its cost of $360,000.
Case 3 Martin gifts the land to his 10-year-old son.
Case 4 Martin sells the land to his mother for $600,000.
Required:
1) For each of the alternatives under consideration, state the deemed proceeds of disposition and state the adjusted cost base for the purchaser. 0)
Expert Answer:
Case 1 Martin sells the land to an arms length party for 500000 Deemed proceeds of disposition 50000... View the full answer
