The basis of 12000 is allocated between the common stock and the preferred

The basis of 12000 is allocated between the common

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d. Sally has 360 shares (300 + 60) from the first batch purchased for a total of $36,000, which gives a basis 52. of $100 per share. She has 120 shares (100 + 20) from the second batch purchased for a total of $18,000, which gives a basis of $150 per share.
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552 CCH Federal Taxation—Basic Principles Chapter 10 © 2010 CCH. All Rights Reserved. d. There is income of $3,000 equal to the difference between the fair market value and the purchase price, 54. and the fair market value of $8,000 then becomes the basis. c. $15,000 appreciation divided by $50,000 taxable gifts is multiplied by $10,000 to give $3,000, which is 55. added to $48,000 to give $51,000. c. If the alternate valuation date is elected and property is distributed before the alternate valuation date, the 56. basis is the value on the date of distribution. b. There is a $500 loss on the April 7 sale, but $250 is disallowed and the other $250 is short-term loss. 57. Basis of 25 shares = $625 + $250, or $875. d. A cousin is not a related party. 58. d. The amount of income can vary from year to year depending on the amount received. 59. d. Daniel’s basis in the rental property must be adjusted to take into account the cost of improvements 60. and other charges such as legal expenses. Thus, $250,000 adjusted basis + $10,000 legal fees + $15,000 assessment for local street improvements that increased the value of the property = $275,000. The ordinary painting and the roof repair were not improvements to the property. a. The purchaser of a business for a lump-sum price must divide the basis among the assets acquired by 61. allocating to each asset an amount of the purchase price proportionate to, but not in excess, of its fair market value, which is $90,000. The excess of the purchase price over the fair market value of the assets is goodwill. c. The gain on Leon’s sale is the amount realized reduced by the adjusted basis and the selling expenses. 62. The amount realized is $120,000 ($75,000 cash plus the $25,000 of artwork received and the $20,000 loan assumed by the buyer). $120,000 less (the adjusted basis of $50,000 + the selling expenses of $5,000) = $65,000. b. Recognized gain or loss is the term used to describe the amount of realized gain or loss that taxpayers 63. report on their tax return. d. A basket purchase is the purchase of real property with one or more items of personal property or the 64. purchase of land and a building for a single, lump-sum amount. a. Losses between related parties are always realized, but never recognized. 65. e. All of the answers are included.
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