1- Which of the following is true with respect to the related party rules? a.A d
ID: 2563153 • Letter: 1
Question
1-
Which of the following is true with respect to the related party rules?
a.A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party.
b.A taxpayer's uncle is a related party for purposes of Section 267.
c.Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return.
d.Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder.
e.None of these choices are true
2-
Which of the following is a capital asset?
a.Accounts receivable held by a dentist
b.Inventory held by a manufacturer
c.All property owned by a taxpayer other than property specifically noted in the law as an exception
d.Depreciable property and real estate used in a trade or business
3-
Steve Corp bought a $600,000 apartment building in June of 2015. Of the purchase price, $104,950 is allocated to the value of the land. What is the maximum amount of depreciation that the company can claim in 2016 (year 2) for the building?
a.$18,000
b.$25,000 under the election to expense business property
c.$9,752
d.$21,816
e.You cannot depreciate property costing over $500,000.
Explanation / Answer
Solution:
1) The correct option is a. A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party.
A disallowed loss on a transaction with related party can be used to offset any future gain when the property is sold to an unrelated party.
2) Correct option is c.All property owned by a taxpayer other than property specifically noted in the law as an exception
A capital asset is defined to include property of any kind held by an assessee, whether connected with their business or profession or not connected with business or profession other than property specifically noted in law as an exception. It includes all kind of property whether movable or immovable, tangible or intangible.
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining part.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.