1. Laura received a jewelry collection from her grandparents as a gift. Laura's grandparents purchased the jewelry for $20,000 about 10 years ago. The FMV at the date of the gift was $15,000. If Laura sells the jewelry collection for $18,000, which of the following is TRUE?

A) Laura will have a realized gain of $3,000.
B)
Laura will have a realized loss of $2,000.
C)
Laura will have no gain or loss.
D) Laura has an offsetting transaction that results in a net $1,000 gain.

2.
Chris received 100 shares of XYZ stock from his brother Matt. Matt's adjusted basis in the stock is $20,000, and the FMV at the date of the gift was $80,000. Matt paid $10,000 in gift tax. What is the new basis to Chris?

A) $30,000
B)
$27,500
C)
$25,000
D) $22,500

3. Jeff gifts property to his dying brother Kevin so he can enjoy his last few months. The property has a basis of $5,000 and a FMV of $8,000 at the time of the gift. Kevin dies in six months and passes the property back to Jeff through his will. The FMV at the date of death was $7,000. What is Jeff's cost basis in the property?

A) $3,000
B)
$5,000
C)
$7,000
D) $8,000


4. Pete and Pat, as joint tenants in a community property state, own an investment account with a $120,000 basis. At Pete's death, the account had a FMV of $180,000. What is Pat's basis now that Pete has died?

A) $60,000
B)
$120,000
C)
$150,000
D) $180,000

5. Scott purchased a house and land and made several capital improvements to increase the market value of his investment. Which of the following will increase his original basis in the home and land?

I. Extending utility service lines
II. Legal Fees incurred for defending the title
III. Assessment for a sidewalk improvement
IV. New electrical wiring throughout the house

A) I only
B)
I and II only
C)
I, II and III
D) I, II, III and IV




Answer Key

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. Taxes

    What The New Gift Tax Rules Will Mean

    The lifetime maximum for gift taxes is $5.12 million. However, it could drop to $1 million. Here's what that will mean.
  4. 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.
  5. 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.
  6. Personal Finance

    How To Get Gift Cards At A Discount

    Use these tips whether you're buying someone a gift or just want to score a discount at your favorite stores.
  7. Personal Finance

    Top Websites For Discounted Gift Cards

    Gift cards can cost less when you buy them through a discount website. Just do the math before you cough up the cash.
  8. 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.
  9. Investing

    How Safe Are Discounted Gift Card Websites?

    Could you buy a gift card online and find out it's worthless? Here's how to protect yourself (and whether you need to).
Frequently Asked Questions
  1. Who is eligible for Canada Pension Plan benefits?

    Learn more about the Canada Pension Plan, who contributes to the plan and who can receive standard, disability, early retirement ...
  2. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
  3. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ...
  4. Do I have to complete all exams within a certain period of time to receive the CFA charter?

    According to the CFA Institute, a candidate can take as much time as necessary to complete all three levels of the CFA program.Therefore, ...
Trading Center