During the current year, Stan sells a tract of land for $800,000. The property w
ID: 2670263 • Letter: D
Question
During the current year, Stan sells a tract of land for $800,000. The property was received as a gift from Maxine on March 10, 1995, when the property had a $310,000 FMV. The taxable gift was $300,000 because the annual exclusion was $10,000 in 1995. Maxine purchased the property on April 12, 1980, for $110,000. At the time of the gift, Maxine paid a gift tax of $12,000. In order to sell the property, Stan paid a sales commission of $16,000.Required:
a. What is Stan's realized gain on the sale. (Show all calculations)
b. How would your answer to Part a. change, if at all, if the FMV of the gift property was $85,000 as of the date of the gift.
Explanation / Answer
The sale price of the propertyis fmv 800000 adjusted price of the property 310000 gift tax 300000 value of the property 312000 a.) gain on sale = sale price -value of the property 800000-312000 = 488000 b.) here the fairmarket value of the property is 850000 as on the date of the gift , but adjusted value is 3000000 so the gain on sale of the property is 800000-312000 =4880000
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