[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

Considering you were right there last time you should be fine. Funny how it works huh? The sections you don't study for show up on the exam, while others you spend hours on barely show up.

[Anonymous]

@ CPAHOPEFU11 I am curious, what is the answer of the MCQ that you posted?

[jeff]

(updated – new question posted at https://www.another71.com/introducing-ninja-mcq-adaptive-learning-technology/)

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[ProdigalCPA]

I need some help on the gain or loss from the sale of stock received as a gift.

It is my understanding that your basis in the stock would be the basis as the person you are receiving the gift from but if you sell the stock between the range of the basis and FMV at the time of receipt of the gift then you will record no gain or loss.

I was doing a simulation in the NINJA MCQ and following is the questions and the solutions( you had to identify the gain/loss):

Question:

Sold 200 shares of Y Corp. stock at $22 per share. Green received the 200 shares as a gift from his brother, three years ago, at the time that the shares had a fair market value of $26 per share. Green's brother purchased the stock for $16 per share.

Solution:

$1,200 Gain

Explanation:

Green's basis in the stock is the same as his brother's purchase price and basis of $16. Green's gain is $6 per share ($22 − $16), or $1,200 total ($6 × $200 shares).

Another question

Question:

Sold 200 shares of Y Corp. stock at $14 per share. Green received the 200 shares as a gift from his brother, three years ago, at the time that the shares had a fair market value of $10 per share. Green's brother purchased the stock for $16 per share.

Solution & Explanation

$0

Green's basis in Y Corp. stock is the same as his brother's purchase price and basis of $16 per share. Since the stock sold at $14 per share, Green's gain is $0. Green is unable to deduct any loss associated with the sale.

Does it matter if the basis is above or below FMV?

HELP PLEASE:)

AUD - 81 Expired,
REG - 59, 61,
BEC - 78 Expired,
FAR - 48 (did not complete the study material AT ALL),

"We are judged by what we finish, not by what we start"

"One day in retrospect, the years of struggle will strike you as the most beautiful"

[Anonymous]

Sorry, but the answer to my question was C.

[Anonymous]

How important do you guys think it is to memorize the definitions of all the trusts such as resulting, constructive, tenative, spendthrift, ect?

[leglock]

Not imprtnt at all imo

[Tax lady]

@prodigal. The first thing you have to do is to determine if there is a gain or loss at the time of the gift. So, if you receive stock where FMV is higher than the donor's basis then this is a “gain basis” and you use donor's basis. If FMV is lower than donor's basis then you use FMV at the time you sell it. However, if you sell it at a cost in between donor's basis and FMV, then no gain or loss is recognized. Does this help?

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[Anonymous]

Thanks, so I won't waste time on that then.

[Anonymous]

Also, I have the 2013 book, is the lifetime exclusion still $1,000,000 at 55%?

[ProdigalCPA]

@Tax lady thanks for your response !

I understand the concept that if you sell it at a cost in between donor's basis and FMV, then no gain or loss is recognized but I was wondering why a gain was recognized on the sale of this stock below:

Question:

Sold 200 shares of Y Corp. stock at $22 per share. Green received the 200 shares as a gift from his brother, three years ago, at the time that the shares had a fair market value of $26 per share. Green's brother purchased the stock for $16 per share.

Solution:

$1,200 Gain

I understand that the basis for Green would be $16. But the $22 rate that he then sold the 200 shares for is between the donor's basis ($16) and the FMV ($26).

Is a gain recognized because it is a “gain basis” (FMV being higher than donor basis) ?

AUD - 81 Expired,
REG - 59, 61,
BEC - 78 Expired,
FAR - 48 (did not complete the study material AT ALL),

"We are judged by what we finish, not by what we start"

"One day in retrospect, the years of struggle will strike you as the most beautiful"

[Tax lady]

@Prodigal. Yep….gain basis so you use the $16/share donor's basis as your new basis. Sold at $22/share, $22-$16 = $6, $6 x 200 = $1,200 is your gain.

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[ProdigalCPA]

@Tax lady

Thanks so much!!….I understand it now

AUD - 81 Expired,
REG - 59, 61,
BEC - 78 Expired,
FAR - 48 (did not complete the study material AT ALL),

"We are judged by what we finish, not by what we start"

"One day in retrospect, the years of struggle will strike you as the most beautiful"

[Tax lady]

Yay! Glad to help.

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[ProdigalCPA]

@tax lady

I just realized that we are using the same study material.I just added the Roger CRAM and that helped me alot

AUD - 81 Expired,
REG - 59, 61,
BEC - 78 Expired,
FAR - 48 (did not complete the study material AT ALL),

"We are judged by what we finish, not by what we start"

"One day in retrospect, the years of struggle will strike you as the most beautiful"

[Author]

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