1. C

Because of the "Double Basis Rule" (where FMV is less than the adjusted basis on the date of the gift), Laura will not have any taxable gains or losses on the sale of the collection if she receives between $15,000 and $20,000 for the sale.

2.
B

New Basis = Original Cost + [(Appreciation / FMV) x Gift tax]
$27,500 = $20,000 + [($60,000 / $80,000) x $10,000]

3.
B Under the "Death Bed Gifting Rule," gifted property received back in one year, or less, by the donor does not receive a "step up" to FMV. Instead, the basis reverts back to the original donor's adjusted basis.

4.
D

Because Pete and Pat owned the account as "community property," Pat receives a full "step up" to FMV on both halves of the account at the death of the first spouse.

5.
D

All of the actions listed above (except legal fees incurred), will be considered capital improvements and increase his original basis. Legal fees incurred for defending or perfecting titles are considered additional items to basis.



Introduction

Related Articles
  1. Taxes

    What Are Gift Taxes?

    If you're not sure what gift taxes are, read on and we'll explain.
  2. Retirement

    4 Thoughtful Retirement Gift Ideas for Men

    This"best gifts list" of the most thoughtful retirement gifts for men includes items appropriate as gifts from co-workers, friends or family members.
  3. Financial Advisor

    How to Gift Your Way to Lower Estate Taxes

    Estate planning is not just for inheritance. High net-worth individuals, who plan properly, can gift their money and save on taxes.
  4. Insights

    3 Best And Worst Gift Cards For 2012

    Here are the gift cards that offer the best deals and those that aren't worth your money.
  5. Personal Finance

    6 Tips For Getting The Most Out Of Gift Cards

    Gift cards are big business, amounting to an estimated $91 billion in annual retail spending. Get the most bang for your gift card buck.
  6. Managing Wealth

    Know Your Stock Cost Basis

    Understanding equity cost basis is critical for tracking the gains or losses of an investment.
  7. Insights

    Why Retailers Love Gift Cards

    Gift cards have many benefits for retailers compared to cash sales. We'll look at a few of them.
  8. Insurance

    Using Life Insurance To Make Charitable Donations

    Your life insurance policy can be a great tool for charitable giving. Find out how.
  9. Insights

    Gifts For People You Aren't That Close To

    Finding a gift for a new boyfriend or girlfriend, your boss, or the postman can sometimes be a challenge.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center