[Anonymous]

I can’t understand the explanation for this question from Becker:

Question: Taxpayer sold land she owned for 4 years with a basis of $60,000 to her brother for $40,000. The brother sold the land for $70,000 6months later.

Answers:

Proceeds: $70,000 sale by brother. Sister has disallowed $20,000 loss.

Basis: $60,000

Gain/Loss: $10,000 Gain

Long/Short Term: Short-term. Starts with date brother purchased property

Amount to be reported on tax return: $10,000 by brother.

This is what I think the answer should be:

Proceeds: $40,000 (because she sold it to her brother for $40,000)

Basis: $60,000

Gain/Loss: $20,000 Loss (but disallowed because she sold the land to a related party)

Long/Short Term: Long- Term (because she held the land for 4years)

Amount to be reported on her tax return: $0 (because it was a lost to a related party).

If the question was asking about the brother’s return I’d think the answer would be:

Proceeds: $70,000

Basis: $40,000

Gain/Loss: $30,000 Gain

Long/Short Term: Short (because the brother held the land for 6months)

Amount to be reported on his tax return: $10,000 (because $20,000 would be deducted from the loss from his sister’s sale to him).

Can someone explain why I got this answer incorrectly? Thanks!

Also this is my second time taking Regulations…I did really well on the multiple choice but bombed the simulation section. Does anyone have any tip on how I should study for the simulation? So far this second time around I’ve done the Wiley test bank twice and Becker once and I’m in the middle of going through Becker’s questions again….I also do taxes!!!! Why can’t I pass this test!!!!!! Thanks in advance everyone!

[Anonymous]

So I thought maybe I could treat this question like a gift and see what the brother's taxable income would be….

I got…

Proceeds: $70,000

Basis: $60,000

Gain: $10,000

Long/Short: Long Term (because you take on the sister's holding period since you took her basis but in the answer it's short term….!!!)

Taxable on return: $10,000

Why can't I get this!

[Anonymous]

So I thought maybe I could treat this question like a gift and see what the brother's taxable income would be….

I got…

Proceeds: $70,000

Basis: $60,000

Gain: $10,000

Long/Short: Long Term (because you take on the sister's holding period since you took her basis but in the answer it's short term….!!!)

Taxable on return: $10,000

Why can't I get this!

[Igotthis]

The way I would answer this question is this way:

Brothers's Basis is 40,000 because he purchased the land for that price.

When he sold the land for 70,000. There is a gain for 30,000 BUT since he bought the property from his sister for gain of 20,000. His sister's loss gets deducted in the nonrelated party transaction (30,000-20,000) is 10,000.

[Igotthis]

The way I would answer this question is this way:

Brothers's Basis is 40,000 because he purchased the land for that price.

When he sold the land for 70,000. There is a gain for 30,000 BUT since he bought the property from his sister for gain of 20,000. His sister's loss gets deducted in the nonrelated party transaction (30,000-20,000) is 10,000.

[Anonymous]

That's how I answered the question IF the question was asking about the brother's return but it's asking about the sister's return….

Becker's answer was:

Proceeds: $70,000 sale by brother. Sister has disallowed $20,000 loss.

Basis: $60,000

Gain/Loss: $10,000 Gain

Long/Short Term: Short-term. Starts with date brother purchased property

Amount to be reported on tax return: $10,000 by brother.

[Anonymous]

That's how I answered the question IF the question was asking about the brother's return but it's asking about the sister's return….

Becker's answer was:

Proceeds: $70,000 sale by brother. Sister has disallowed $20,000 loss.

Basis: $60,000

Gain/Loss: $10,000 Gain

Long/Short Term: Short-term. Starts with date brother purchased property

Amount to be reported on tax return: $10,000 by brother.

[TDKR]

Watch Page 54 (Video), it's the crazy rule that Gain/Loss is based on the Sale price. Tim can explain a lot better than I can.

REG - 72, 72, 81
BEC - 77
FAR - 70, 81
AUD - 74 "so that's what it feels like." Round 2: 79

Passing the exam is not impossible task. GIVING UP is the only way YOU can make it impossible!

[TDKR]

Watch Page 54 (Video), it's the crazy rule that Gain/Loss is based on the Sale price. Tim can explain a lot better than I can.

REG - 72, 72, 81
BEC - 77
FAR - 70, 81
AUD - 74 "so that's what it feels like." Round 2: 79

Passing the exam is not impossible task. GIVING UP is the only way YOU can make it impossible!

[Anonymous]

Thanks!!!!

[Anonymous]

Thanks!!!!

[Author]

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