Roberto has received various gifts over the years. He has decided to dis- pose o

Question

Roberto has received various gifts over the years. He has decided to dis- pose of the following assets he received as gifts:

In 1951, he received land worth $32,000. The donor’s adjusted basis was $35,000. Roberto sells the land for $95,000 in 2015.

In 1956, he received stock in Gold Company. The donor’s adjusted basis was $19,000. The fair market value on the date of the gift was $34,000. Roberto sells the stock for $40,000 in 2015.

In 1962, he received land worth $15,000. The donor’s adjusted basis was $20,000. Roberto sells the land for $9,000 in 2015.

In 2003, he received stock worth $30,000. The donor’s adjusted basis was $42,000. Roberto sells the stock for $38,000 in 2015.

What is the recognized gain or loss from each of the preceding transactions? Assume for each of the gift transactions that no gift tax was paid.

Explanation / Answer

Requirement 1

$95000 (amount realized) - $ 35000 (adjusted basis) = $ 60000 (recognized gain)

Requirement 2

$ 40000 (amount realized) - $ 19000 (adjusted basis) = $ 21000 (recognized gain)

Requirement 3

$ 9000 (amount realized) - $15000 (adjusted basis) = $6000 (recognized loss)

Requirement 4

The proceeds $ 38000 are between the gain basis of $ 42000 and the loss basis of $ 30000. Therefore neither gain nor loss is recognized.

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