1.Michelle purchased her home for $150,000, and subsequently added a garage cost

ID: 2382263 • Letter: 1

Question

1.Michelle purchased her home for $150,000, and subsequently added a garage costing $25,000 and

a new porch costing $5,000. Repairs to the home's plumbing cost $1,000. What is the amount of

the adjusted basis in the home?

2.Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4 of

the current year. His father paid $30 per share for the stock on September 2, 1995. The FMV of

the stock on the date of death was $50 per share. On September 4 this year, the FMV of the stock

was $55 per share. The executor did not elect the alternate valuation date. Monte sold the stock

for $65 per share on December 3. What is the amount and nature of any gain or loss?

A) $ 10,000 LTCG

B) $ 10,000 STCG

C) $ 15,000 LTCG

D) $ 15,000 STCG

1.$180,000 ($150,000+$25,000+$5,000)

2.C) $ 15,000 LTCG ($65-$50)*1000=$15000

[Period of holding shall be calculated from the date of acquisition by previosu owner ,hence LTCG ]

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.