Property Plant and Equipment Paper 6

1

Laura’s father, Albert, gave Laura a gift of 500 shares of Liba Corporation common stock in 2012. Albert’s basis for the Liba stock was $4,000. At the date of this gift, the fair market value of the Liba stock was $3,000. If Laura sells the 500 shares of Liba stock in 2013 for $2,000, her basis is






2

Laura’s father, Albert, gave Laura a gift of 500 shares of Liba Corporation common stock in 2012. Albert’s basis for the Liba stock was $4,000. At the date of this gift, the fair market value of the Liba stock was $3,000. If Laura sells the 500 shares of Liba stock in 2013 for $3,500, what is the reportable gain or loss in 2013?






3

On June 1, 2012, Ben Rork sold 500 shares of Kul Corp. stock. Rork had received this stock on May 1, 2012, as a bequest from the estate of his uncle, who died on February 1, 2012. Rork’s basis was determined by reference to the stock’s fair market value on February 1, 2012. Rork’s holding period for this stock was






4

Fred Zorn died on June 5, 2012, bequeathing his entire $6,000,000 estate to his sister, Ida. The alternate valuation date was validly elected by the executor of Fred’s estate. Fred’s estate included 2,000 shares of listed stock for which Fred’s basis was $380,000. This stock was distributed to Ida nine months after Fred’s death. Fair market values of this stock were
At the date of Fred’s death $400,000
Six months after Fred’s death 450,000
Nine months after Fred’s death 480,000
Ida’s basis for this stock is






5

On October 1, 2012, Lois Rice learned that she was bequeathed 1,000 shares of Elin Corp. common stock under the will of her uncle, Pat Prevor. Pat had paid $5,000 for the Elin stock in 2008. Fair market value of the Elin stock on October 1, 2012, the date of Pat’s death, was $8,000 and had increased to $11,000 six months later. The executor of Pat’s estate elected the alternative valuation for estate tax purposes. Lois sold the Elin stock for $9,000 on December 1, 2012, the date that the executor distributed the stock to her. Lois’ basis for gain or loss on sale of the 1,000 shares of Elin stock is






6

On October 1, 2012, Lois Rice learned that she was bequeathed 1,000 shares of Elin Corp. common stock under the will of her uncle, Pat Prevor. Pat had paid $5,000 for the Elin stock in 2008. Fair market value of the Elin stock on October 1, 2012, the date of Pat’s death, was $8,000 and had increased to $11,000 six months later. The executor of Pat’s estate elected the alternative valuation for estate tax purposes. Lois sold the Elin stock for $9,000 on December 1, 2012, the date that the executor distributed the stock to her. Lois should treat the 1,000 shares of Elin stock as a






7

In January 2013, Joan Hill bought one share of Orban Corp. stock for $300. On March 1, 2013, Orban distributed one share of preferred stock for each share of common stock held. This distribution was nontaxable. On March 1, 2013, Joan’s one share of common stock had a fair market value of $450, while the preferred stock had a fair market value of $150.
After the distribution of the preferred stock, Joan’s bases for her Orban stocks are
Common . . . . Preferred






8

In January 2013, Joan Hill bought one share of Orban Corp. stock for $300. On March 1, 2013, Orban distributed one share of preferred stock for each share of common stock held. This distribution was nontaxable. On March 1, 2013, Joan’s one share of common stock had a fair market value of $450, while the preferred stock had a fair market value of $150.
The holding period for the preferred stock starts in






9

On July 1, 2007, Lila Perl paid $90,000 for 450 shares of Janis Corp. common stock. Lila received a nontaxable stock dividend of 50 new common shares in August 2012. On December 20, 2012, Lila sold the 50 new shares for $11,000. How much should Lila report in her 2012 return as long-term capital gain?






10

In a “like-kind” exchange of an investment asset for a similar asset that will also be held as an investment, no taxable gain or loss will be recognized on the transaction if both assets consist of






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