Question

1. Joe buys a piece of land on January 3^rd of the current year. He pays$10,000 in cash. What is Joe’s basis in the land?

2. Suppose Joe gives the seller $7,000 in cash and a note for $3,000 paying interest at the current rate of 3%. What is Joe’s basis in the land?

3. Suppose instead that Joe gives the seller $6,000 in cash, a note with interest, promising to pay $3,000 in one year, and a piece of jewelry worth $1,000. What is Joe’s basis in the land?

4. Assume Joe’s basis in the land is $10,000. At the end of the year the land is now worth $14,000. Does Joe realize income on that date?

5. Suppose the following year Joe’s sells the land which is not subject to a mortgage. Joe receives $15,000 in cash. Does Joe realize a gain or loss on the transaction and if so, how much is it?

6. Suppose instead the land is subject to a mortgage of $3,000 and Joe receives$12,000 in cash and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so how much is it?

7. Suppose Joe instead received a piece of jewelry worth $12,000 and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so, how much is it?

8. Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000 in cash and signs a mortgage for $300,000. After living in the house as her principle residence for 2 years, she sells the house for $900,000 in cash add the buyer assumes her mortgage of$200,000. What is a Alizsa’s amount realized on the sale?

9. Does Aliza realize a gain on the sale of her residence, and if so, what is the amount?

10. Does Aliza recognize a gain on the sale, and if so what is the amount?

11. Isaac buys a piece of land as an investment, paying $20,000. Three years later he trades the land to Isadore for a piece of land worth $26,000. Isaac holds the new land as an investment. Does Isaac realize a gain on the swap of the lland, and if so how much gain is realized?

12. Does Isaac recognize a gain on the swap of the land and if so how much is it?

13. What is Isaac’s adjusted basis in the new property he receives?

14. What is Isaac’s holding period in the new land he receives?

15. Que purchased land for $21,000 by paying $16,000 and signing a mortgage for $5000. Over a year later Que trades that land for a new piece of land worth $26,000 . The other party buyer assumes Que’s mortgage. How much if any gain does Que realize on the swap?

16. Que’s mortgage of $4,000 is assumed and Que receives land worth $26,000. Does Que recognize gain on the swap and if so, how much is it?

17.   Que buys the land for $16,000 and signs a mortgage for $4,000. Later Que swaps the land for new land worth $30,000 that is subject to a $3,000 mortgage. Does Que recognize gain on the transaction and if so, how much?

18. What is Que’s adjusted basis and holding period in the new land?

19. Show the formula to determine gain or loss realized and recognized on a sale or exchange of property.

20. Show the formula used to determine Que’s basis in the land received in question 18.

Answer 1

answer 1 joe basis is 10000

ans2 joe basis 7000

ans 3 jo basis is 7000

ans 4 no he cant realise income on that