Anna\'s AGI is: $185,000 b. $187,000 $285,000 $282,000. 5385,000. . d. e· 5. Jam

Question

Anna's AGI is: $185,000 b. $187,000 $285,000 $282,000. 5385,000. . d. e· 5. James exchange farm land that he used in his farming business for a building used by Mary in her bicycle manufacturing business. The land had a FMV of $245,000 and cost $285,000. The allowable depreciation was $65,000, but because of an error, Mary only took $50,000 of Depreciation. The building had a FMV of $230,000 and an adjusted basis of $265,000. Because the building was expected to increase in value rapidly, Mary only gave James $15,000 cash. What is James' realized gain or loss? a. $0 b. $5,000 Loss c. $10,000 Gain d. $25,000 Gain e. None of the above 6. Assume the same fact as in question 5 above, what is Mary's recognized gain of loss? a. $20,000 Loss b. $15,000 Gain c. $25,000 Gain d. $20,000 Gain e. None of the above George purchased stock in 2016 for $11,500. He gave the stock to his son, William, in 2017. On the date of the gift the FMV of the stock was $8,500 and no gift tax was paidc the transfer. William later sold the stock for $7,500. What is William's recognize gain loss on the sell of the stock: 7. a. b. c. d. e. Loss of $1,000 Gain of $1,000 Loss of $4,000 Gain of $7,500 None of the above

Explanation / Answer

5. Book Value of Land = 285,000 - 50,000 = 235,000

Amount Received = Fair Value of Building + Cash Boot

= 230,000 + 15,000 = 245,000

Gain on Transaction = 245,000 - 235,000 = 10,000 Gain

Answer is C

6. Adjusted Basis of Building = 265,000

Fair Value of Land = 245,000

Gain or Loss = Fair Value of Land received - (Adjusted basis building + Cash Paid)

= 245,000 - (265,000 + 15,000) = 35,000 Loss

Answer is D

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