Juliana purchased land three years ago for $79,300. She made a gift of the land to Tom, her brother, in the current year, when the fairmarket value was $111,020. No Federal gift tax is paid on the transfer. Tom subsequently sells the property for $99,918.a. Tom's basis in the land is $and he has a realizedof $on the sale.b. Assume, instead, that the land has a fair market value of $71,370 on the date of the gift, and that Tom sold the land for $67,802.Tom's basis in the land is $and he has a realizedof $on the sale.

First, calculate the realized capital gain for Tom's basis:a. Tom's basis on land is $79,300 (as the…

Answered: Juliana purchased land three years ago…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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During the current year, David sells a tract of land for $700,000. The property was received as a gift from Marva on March 10, 1995, when the property had a $340,000 fair market value (FMV). The taxable gift was $330,000 because the annual exclusion was $10,000 in 1995. Marva purchased the property on April 12, 1980, for $76,000. At the time of the gift, Marva paid a gift tax of $17,000. In order to sell the property, David paid a sales commission of $21,000. Read the requirements. Requirement a. What is David's realized gain on the sale? Select the formula, then calculate David's realized gain on the sale. (Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest dollar.) Minus: Realized gain Requirement b. How would your answer to Part a change, if at all, if the FMV of the gift property was $45,000 as of the date of the gift? The realized gain in this scenario is
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