1. Problem 46

Liam owns a personal use boat that has a fair market value of $35,000 and an adjusted basis of $45,000. Liam's AGI is $100,000. Calculate the realized and recognized gain or loss if:

a. Liam sells the boat for $35,000.

b. Liam exchanges the boat for another boat worth $35,000.

c. The boat is stolen and Liam receives insurance proceeds of $35,000.

d. Would your answer in part (a) change if the fair market value and the selling price of the boat were $48,000? Explain.

2. Problem 52

Mahan purchases 1,000 shares of Bluebird Corporation stock on October 3, 2023, for $300,000. On December 12, 2023, Mahan purchases an additional 750 shares of Bluebird stock for $210,000. According to market quotations, Bluebird stock is selling for $285 per share on December 31, 2023. Mahan sells 500 shares of Bluebird stock on March 1, 2024, for $162,500.

a. What is the adjusted basis of Mahan's Bluebird stock on December 31, 2023?

b. What is Mahan's recognized gain or loss from the sale of Bluebird stock on March 1, 2024, assuming that the shares sold are from the shares purchased on December 12, 2023?

c. What is Kevin's recognized gain or loss from the sale of Bluebird stock on March 1, 2024, assuming that Mahan cannot adequately identify the shares sold?

3. Problem 63

Louis owns three pieces of land with an adjusted basis as follows: parcel A, $75,000; parcel B, $125,000; and parcel C, $175,000. Louis sells parcel A to his uncle for $50,000, parcel B to his partner for $120,000, and parcel C to his mother for $150,000.

a. What is the recognized gain or loss from the sale of each parcel?

b. If Louis's uncle eventually sells his land for $90,000, what is his recognized gain or loss?

c. If Louis's partner eventually sells his land for $130,000, what is his recognized gain or loss?

d. If Louis's mother eventually sells her land for $165,000, what is her recognized gain or loss?

4. Problem 71

What is the basis of the received property in each of the following exchanges?

a. Apartment building held for investment (adjusted basis of $145,000) for office building to be held for investment (fair market value of $225,000).

b. Land and building used as a barbershop (adjusted basis of $190,000) for land and building used as a grocery store (fair market value of $350,000).

c. Office building (adjusted basis of $45,000) for bulldozer (fair market value of $42,000), both held for business use.

d. IBM common stock (adjusted basis of $20,000) for ExxonMobil common stock (fair market value of $28,000).

e. Rental house (adjusted basis of $90,000) for mountain cabin to be held for rental use (fair market value of $225,000).

f. General partnership interest (adjusted basis of $400,000) for a limited partnership interest (fair market value of $580,000).

5. Problem 72

Suni owns land (adjusted basis of $90,000; fair market value of $125,000) that she uses in her business. She exchanges it for another parcel of land (worth $100,000) and stock (worth $25,000). Determine Suni's:

a. Realized and recognized gain or loss on the exchange.

b. Basis in the new land.

c. Basis in the stock she received.