Chapter 14 - CHAPTER 14 PROPERTY TRANSACTIONS BASIS DETERMINATION RECOGNITION OF GAIN OR LOSS TRUE/FALSE 1 Gain or loss is realized any time there

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 14— PROPERTY TRANSACTIONS: BASIS DETERMINATION, RECOGNITION OF GAIN OR LOSS TRUE/FALSE 1. Gain or loss is realized any time there is a sale or other disposition of property. ANS: T Gain or loss is realized, but in some cases it is not recognized. PTS: 1 REF: p. 14-3 and § 1001 2. The cost basis of a given property does not include liabilities payable to the seller by the buyer because no cash changes hands. ANS: F The cost basis of property includes any liabilities incurred. PTS: 1 REF: Example 8, p. 14-6, and Reg. § 1.1012-(a) 3. A taxpayer who owns indistinguishable shares of stock purchased in two or more transactions and who later sells some of the stock must identify the shares sold using the last-in, first-out (LIFO) method. ANS: F The first-in, first-out (FIFO) method must be used to identify indistinguishable shares sold. PTS: 1 REF: Example 10, pp. 14-6 and 14-7, and Reg. § 1.1012-l(c) 4. The general rule to determine the basis of property acquired by gift is that the donee's basis is equal to the donor's basis plus any gift taxes paid. ANS: F The donee's basis is generally the donor's basis plus any gift tax paid on appreciation only. For gifts prior to 1977, the statement is True. There is an exception to the rule if the donor's basis exceeds FMV at the time of the gift. PTS: 1 REF: Examples 12 through 15, pp. 14-7 and 14-8, and § 1015(a) 5. The general rule for determining the basis of property acquired from a decedent does not apply to in- come in respect of a decedent. ANS: T Income in respect of a decedent is recognized as income by the estate or heir under the appropriate method of accounting when it was earned. Accordingly, the basis in such income may not be "stepped up." PTS: 1 REF: p. 14-9 and §§ 1014(a) and 691 6. The alternate valuation date for an estate is nine months after a decedent's death. ANS: F The alternate valuation date for an estate is six months after the decedent's death.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
PTS: 1 REF: p. 14-9 and § 2032(a) 7. In order for an executor of an estate to elect the alternate valuation date, an estate tax return must be filed and the alternate valuation must be less than the FMV as of the decedent's death. ANS: T An estate tax return must be filed, and the alternate valuation must result in a lower estate value and a lower estate tax. PTS: 1 REF: p. 14-9 8. A deferred gain resulting from a nontaxable exchange of property represents an increase in basis. ANS: F Nontaxable exchanges generally defer, rather than dismiss, recognition of gain or loss. Such a deferred gain represents a reduction in basis. PTS: 1 REF: Example 19, p. 14-10, and § 1034(e) 9. When property is converted from personal to business use, the basis for loss and for depreciation can be no greater than the fair market value at the time of the conversion.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

Page1 / 14

Chapter 14 - CHAPTER 14 PROPERTY TRANSACTIONS BASIS DETERMINATION RECOGNITION OF GAIN OR LOSS TRUE/FALSE 1 Gain or loss is realized any time there

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online