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Week 4 INdividual21

# Week 4 INdividual21 - I:5-34 Basis of Property Received as...

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I:5-34 Basis of Property Received as a Gift. Doug receives a duplex as a gift from his uncle. The uncle’s basis for the duplex and land is \$90,000. At the time of the gift, the land and building have FMVs of \$40,000 and \$80,000, respectively. No gift tax is paid by Doug’s uncle at the time of the gift. a. To determine gain, what is Doug’s basis for the land? 40,000/120,000 = 0.3333 X 90,000 = 30,000 b. To determine gain, what is Doug’s basis for the building? 80,000/120,000 = .6666 X 90,000 = 60,000 c. Will the basis of the land and building be the same as in Parts a and b for purposes of determining a loss? Since the FMV on the date of the gift is greater than the donor's basis then it is Yes.

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I:5-38 Sale of Assets Received as a Gift and Inherited. Daniel receives 400 shares of A&M Corporation stock from his aunt on May 20, 2009, as a gift when the stock has a \$60,000 FMV. His aunt purchased the stock in 2002 for \$42,000. The taxable gift is \$60,000 because she made earlier gifts to Daniel during 2009 and used the annual exclusion. She paid a gift tax of \$9,300 on the gift of A&M stock to Daniel. Daniel also inherited 300 shares of Longhorn Corporation preferred stock when his uncle died on November 12, 2009, when the stock’s FMV was \$30,000. His uncle purchased the stock in 1990 for \$27,600. Determine the gain or loss on the sale of A&M and Longhorn stock on December 15, 2009, under each alternative situation below.
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