1. Ryan, a lawyer, purchases shares of corporate stock for $20,000 in December of Year 1. At the end of Year 2, they are worth $17,000. He sells the shares in October of Year 3 for $13,000. Describe Ryan's tax consequences with respect to the purchase and ownership of the shares under current law.
2. Conglomerate, Inc., has a cafeteria in its headquarters building that is open to all employees. The cafeteria charges low prices (substantially less than the FMV of the meals) in order to just break even in running the cafeteria. Must the employees include the difference between the FMV of the meals and the price paid for them? Assume that § 119 is not satisfied on the facts. See § 132(e)(2). What if the facility is an Executive Dining Room open only to Executives?
3. High-Tech Corp pays the cost of air fare, hotel, taxis, meals, and incidental expenses for Joseph and Michael to fly from Cleveland, Ohio, to Palo Alto, California, so that Joseph can interview for a position as a software engineer with High-Tech. The total cost of the expense-paid trip is $3,000 ($1,500 for each). Michael, Joseph's spouse, is a lawyer, and he uses the time in Palo Alto to explore the local legal market and the potential for obtaining a lawyer position. Must Joseph, Michael, or both include the value of the expense-paid trip in their Gross Incomes? Would it make any difference if Michael were a stay-at-home spouse with three young children? NO and NO.
4. Charles, a surgeon, is a knowledgeable art lover, and he browses the flea markets and garage sales in the hope of finding an undiscovered treasure. At one garage sale in May of Year 1, Charles sees a small painting that he believes may well be the work of the 15th-century French artist Jean Fouquet, who is credited with inventing the portrait miniature. Many of his early works were believed to have been lost in the French Revolution, but a few have since been found in unexpected places. Charles bargains down the price from the $150 marked price to $100. After the purchase, he enlists the help of the world's foremost expert of Jean Fouquet's work, who confirms in December of Year 1 that the work is authentic and has a likely market value of $1 million. Charles properly insures the work and hangs it on his wall to enjoy. In Year 4, however, Charles decides that he would rather have the cash and sells the painting through an art auction house for $3 million. Describe his tax consequences with respect to the purchase in Year 1 and the sale in Year 4.