77. Leonard London sold a building used in his business to Michelle Martinson. He had purchased the property several years previously for $340,000, $300,000 of which was the mortgage. Major improvements in the amount of $240,000 had been made. At the time of the sale, Leonard had taken $220,000 in straight-line depreciation. Leonard paid $104,000 in selling expenses. Michelle gave Leonard $400,000 in cash and unlike property with a fair market value of $240,000, assumed a delinquent real estate bill of $105,000 and assumed Leonard’s mortgage on the property in the amount of $234,000. What is Leonard’s gain on the sale?a. $191,000b. $385,000c. $410,000d. $503,000*e. $515,000
78. Wilma Waters purchased land from Carl Carmichael for $32,000 cash, the assumption of an existing mortgage of $43,000, and payment of delinquent back taxes of $8,300. Carl’s adjusted basis in the land that he had purchased as an investment was $85,000. Carl also incurred $9,330 in selling costs. What is Carl’s recognized gain or loss?79. As a graduation present Barbara Brooks received 1,000 shares of stock from her aunt. The stock has a fair market value of $25,000 at the time of the gift. The aunt’s adjusted basis in the stock at the time of the gift was $30,000. A gift tax of $2,800 was paid by the aunt. Barbara sold the stock in the following year for $29,000. What is Barbara’s gain or loss on the sale?80. On April 18, 2013, Jim Jenkins sold 300 shares of Redwood Corporation common stock for $8,400. Jim acquired the stock in 2009 at a cost of $10,000. On May 9, 2013, he repurchased 150 shares of Redwood Corporation common stock for $3,600 and held them until August 25, 2013, when he sold them for $6,000. How should Jim report the above transactions for 2013? Correct Answer:The realized loss to Jim is $1,600 ($8,400 - $10,000); however, only one-half of that loss or $800 is allowed. There was a wash sale for 150 shares because identical shares were purchased within 30 days of sale. The basis of the 150 new shares is $4,400 ($3,600 + $800 disallowed loss). Therefore, Jim's gain on the August 25 sale is $1,600 ($6,000 - $4,400), and it is long- term gain since the holding period of the old stock is included.81. Norman Nelson owns 1,000 shares of Newton Corp. common stock which he purchased for $60,000 and later receives a nontaxable preferred stock dividend of 300 shares of Newton preferred stock when the FMV of the preferred was $100 per share and the FMV of the common was $90 per share. What is the basis of the common and preferred shares after the dividend? Correct Answer:The basis of the preferred is
$30,000x $60,000 = $15,000$30,000 + $90,000The basis of the common is $90,000x $60,000 = $45,000$30,000 + $90,00082. Ronald Rankin owns 1,000 shares of Royal Corp. common stock with a basis of $30,000. He receives a 10 percent taxable stock dividend when the FMV of each share of stock is $15. How much income does he have?
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