1 Jeannie and Gene were married and lived in New York They o

1. Jeannie and Gene were married and lived in New York. They owned undeveloped land as joint tenants with right of survivorship which they purchased in 1999, and the property had an adjusted basis of $200,000 on December 7, 2017. Gene died on December 7, 2017 when the property had a FMV of $450,000. If Jeannie sold the property on April 2, 2018 for $650,000, how much gain did she realize on the sale?

                a.            $200,000

                b.            $225,000

                c.             $325,000

                d.            $450,000

2. David died testate in 2017, and he devised real estate to son Jack. The value as finally determined for federal estate tax purposes of the real estate was $1,000,000. David had purchased the real estate for $200,000 cash five years before. David’s estate paid a total federal estate tax of $4,000,000, with the estate tax attributable to the real estate being $300,000. The Personal Representative of David’s estate sold the property for $750,000 nine months after the decedent’s death in order to pay administration expenses and federal estate taxes, there being insufficient assets to cover all expenses and taxes The estate’s gain or loss realized is

                a.            $550,000short-term capital gain              

                b.            $250,000 short-term capital gain             

                c.             $550,000 long-term capital gain

                d.            $250,000 long-term capital loss

                e.            none of the above

3. Taxpayer sold real estate on December 17, 2017 to his nephew for $100,000. The taxpayer’s basis is $200,000. The taxpayer

                a.            cannot take the loss because the sale is to a related party.

                b.            can take the loss if the real estate is residential real property.

                c.             cannot take the loss if taxpayer owned the real estate for less than one year.

                d.            can take the loss.

Solution

1. Answer is option A $200,000

650,000 amount realized - $450,000 basis = $200,000.

2. Answer is option E none of the above

750000-200000-300000 = 250000 long term capital gain

3. Answer is option A cannot take the loss because the sale is to a related party.

Code Sec. 267 specifically disallows losses on sales to related parties