Question

Problem 13-55 (Algorithmic) (LO. 1, 2, 3) Roberto has received various gifts over the years and has decided to dispose of the following assets he received as gifts: What is the recognized gain or loss from the following transactions, assuming that no gift tax was paid when the gifts were made. If an answer is zero, select "neither a gain nor a loss" and enter"" as the amount. a. In 1981, he received land worth $37,440. The donor's adjusted basis was $42,120. Roberto sells the land for $93,600 in 2019. of $ is recognized. b. In 1986, he received stock in Gold Company. The donor's adjusted basis was $10,240. The fair market value on the date of the gift was $8,960. Roberto sells the stock for $12,800 in 2019. of $ is recognized. C. In 1992, he received land worth $54,375. The donor's adjusted basis was $72,500. Roberto sells the land for $32,625 in 2019. of $ is recognized. d. In 2013, he received stock worth $30,000. The donor's adjusted basis was $42,000. Roberto sells the stock for $38,000 in 2019. of $ is recognized.

Answer 1

a) As per the pub 551 of IRS on basis of assets

FmV less then donor adjusted basis , then if we have gain by selling the product we will take the adjusted basis of donor

In this case Land Gift received by person , the adjusted basis of the donor =$42120 and fair value of land $37440

we will consider adjusted basis =$42120

and sale of land in 2019 $93600

Gain = $93600-42120

Gain   = $51480

b) Donor adjusted basis =$10240

Fair value of gift = $8960

sale of stock = $12800

Gain = sale price -donor adjusted basis

gain = $ 12800- $ 10240

gain = $2560

c) As per the pub 551 of IRS on basis of assets

if Fmv less than donor adjusted basis and we are having loss by sale of that gift then we will consider fmv of gift for calculating loss

FMV=$54375

Donor adjusted basis =$72500

sale price = $32625

Loss = sale price - fMV of donor

Loss = $32625-$54375

Loss = $ 21750

d) In this case Sale price is between FMV of donor and Adjusted basis of donor

sale price = $38000

Adjsuted BAsis = $42000

Fmv = $ 30000

if we consider fmv we will be having gain= $ 38000- $30000

=$8000

If we consider Adjusted BAsis we have loss = $ 38000-$42000

loss = $ 4000

So in this situtation we will say It will neither have gain nor loss

answer = neither loss nor gain = 0