Chapter 14-15-16-17

Discussion Question 14

Question 1

Upon the sale or other disposition of property, what four questions should be considered for income tax purposes?

Question 4

If a taxpayer sells property for cash, the amount realized consists of the net proceeds from the sale. For each of the following, indicate the effect on the amount realized.

a. The property is sold on credit.

b. A mortgage on the property is assumed by the buyer.

c. A mortgage on the property is assumed by the seller.

d. The buyer acquires the property subject to a mortgage of the seller.

e. Stock that has a basis to the purchaser of $6,000 and a fair market value of $10,000 is received by the seller as part of the consideration.

Discussion Question 15

Question 2

Distinguish between a loss that is not recognized on a nontaxable exchange and a loss that is not recognized on the sale or exchange of a personal use asset.

Question 3

Karla exchanges personal use property for property to be held for productive use in her business. Can this transaction qualify for like-kind exchange treatment? Explain.

Discussion Question 16

Question 1

Sheila inherited 300 shares of stock, 100 shares of Magenta and 200 shares of Purple. She has a stockbroker sell the shares for her, uses the proceeds for personal expenses, and thinks nothing further about the transactions. What issues does she face when she prepares her Federal income tax return?

Question 26

Melaney has had a bad year with her investments.She lent a friend $8,000, the friend did not repay the loan when it was due and then declared bankruptcy. The loan is totally uncollectible. Melaney also was notified by her broker that the Oak corporate bonds she owned became worthless on October 13, 2015. She had purchased the bonds for $22,000 on November 10, 2014. Melaney also had a $60,000 loss on the disposition of § 1244 corporate stock that she purchased several years ago. Melaney is single.

a. What are the nature and amount of Melaney's losses?

b. What is Melaney's AGI for 2015 assuming that she has $65,000 of ordinary gross income from sources other than those discussed?

c. What are the mature and amount of Melaney's loss carryforwards?

Discussion Question 17

Question 1

Harriet, and organic farmer, has owned depreciable farm equipment for several years. Is the equipment a capital asset? Why or why not?

Question 3

Bernice, a sole proprietor, sold two business assets during the year. As a result, she has an ordinary loss and a § 1231 gain. The loss asset was office furniture that was held for eight months, and the gain asset is land that was held for five years. Why doesn't the ordinary loss offset the § 1231 gain?