[jeff]

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

[Mamabear]

So really the basis for the new truck is the price of the new truck minus the deferred gain of $2K ($6K value given for old truck – FMV $4K).sort of like the other problem.

Edited

That would be great Tax lady. I have to type all my problems in because they are coming a from a book. If you guys are in a test bank and can paste copy we could go through more questions faster.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[WANNABE_CPA]

these are two alternatives of getting the same answer, I understand it this way:

Basis of new =FMV of new – Deferred Gain + deferred Loss

I ve not paid much attention for other basis which is with Old property basis as i dnt want to get confused in both…Just pick up one which you are comfortable with.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[WANNABE_CPA]

I am getting really confused with Spreading stock questions…I ll paste one question after this set of 10 questions.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Mamabear]

I like your way Wannabe. Changing my notes now.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[Tax lady]

Rick Berger owned a parcel of investment real estate that had an adjusted basis of $30,000 and a fair market value of $47,000. During the current year, Berger exchanged his investment real estate for the items of property listed below.

Land to be held for investment (fair market value) $35,000

A motorcycle to he held for personal use (fair market value) 5,000

Cash 7,000

What is Rick Berger’s recognized gain and basis in his new investment real estate?

$ 7,000 gain recognized; $23,000 basis for real estate.

$ 7,000 gain recognized; $30,000 basis for real estate.

$12,000 gain recognized; $30,000 basis for real estate.

$12,000 gain recognized; $35,000 basis for real estate.

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

[Tax lady]

Question 2

Bluff purchased equipment for business use for $35,000 and made $1,000 of improvements to the equipment. After deducting depreciation of $5,000, Bluff gave the equipment to Russett for business use. At the time the gift was made, the equipment had a fair market value of $32,000. Ignoring gift tax consequences, what is Russett’s basis in the equipment?

$31,000

$32,000

$35,000

$36,000

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

[WANNABE_CPA]

Is A by any chance $7000 and $28000?????

Because thats what i get as the answer.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[WANNABE_CPA]

Personal property (Motocycle) will not be considered in it right?

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Mamabear]

OK. I'm going to work this out on here so you guys can tell me if my thinking is wrong.

Boot received is $7K in cash + $5K in nonlike property =$12K

The realized gain = $30K – $47K = 17K

the recognized gain is the lesser of the realized gain or the boot received = $12K

The basis of the new property is $30K +$12K -12K = $30K.

So C?

So the FMV of the old property at the exchange date is not taken into consideration at all?

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[Tax lady]

You got it mama

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

[WANNABE_CPA]

Nonlike property will be considered Boot?? I never knew this

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Tax lady]

Yes anything “extra” is considered boot. Also, any mortgages assumed/given up is boot.

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

[Mamabear]

I have that boot is equal to cash, unlike property, mortgages/liabilities assumed.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[WANNABE_CPA]

Thanks…I dont see Becker mentioning it here..

Then it makes sense

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Mamabear]

For the second question I think it's A. I think a donee's basis in gifted property is the donor's basis + taxes paid as long as that is less than FMV, but I'm not sure what happens if FMV had been less than the donor's basis. I also have some ridiculously long equation that I don't understand and don't know when to use:

Donor's adjusted basis + (gift tax *(FMV – adjusted basis / FMV – exclusion) = recipient's new basis. Anyone know when to use this formula??

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[Author]

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