Question

Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen...

Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2016, Owen and Lisa exchange business pickup trucks. Lisa gives up a blue pickup truck with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a red pickup truck with a fair market value of $5,500 and cash of $500. Owen’s adjusted basis in the truck he exchanges is $2,500. In March 2017, Owen sells the blue pickup truck to a third party for $5,800.

Locate and review Publication 544, Nontaxable Exchanges. Please explain and calculate the amount of Owen and Lisa’s gain recognition for 2016. Also determine the effect, if any, of the subsequent sale in 2017.

Lisa Sizemore, a taxpayer in the 10 percent tax bracket, purchased stock as an investment on July 11, 2015. She sold the stock on July 9, 2016, 3 days before qualifying for the long-term holding period. If Lisa had waited until July 12, 2016 to sell the stock, she would have qualified for the 0 percent capital gains tax rate. Instead, the sale will now be taxed at ordinary income rates. Upon realizing this, Lisa has told you that she will “fudge” the sale date to July 12. She says to you, “What’s the big deal? It’s just 3 days.” What would you say to Lisa?

Homework Answers

Answer #1

Answer:

But,on subsequent sale,owen has to recognise gain/loss as follows

Adjusted basis for owen=Adjusted basis of pickup truck given up+Money paid in the like-kind exchange

Adjusted basis for owen=$2500+$500=$3000

Money realised=$5800

Gain to owen=Money realised-Adjusted basis=$5800-$3000=$2800


Here there is no loss or gain owen and lisa.
Because of exchange is a Non-taxable exchange since it is a like-kind exchange and
Pickup truck is a qualifying asset.

here owen ha to recognise gain or loss as follows because its subsequent sale.

Adjusted basis for owen

=$2500+$500=$3000

Money realised
=$5800

Gain to owen
= Money realised-Adjusted basis
= $5800 - $3000
= $2800

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen...
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2018, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a two acre property in Texas with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a one acre property in Arkansas with a fair market value of $5,500...
Sue, a taxpayer in the 10 percent tax bracket, purchased stock as an investment on July...
Sue, a taxpayer in the 10 percent tax bracket, purchased stock as an investment on July 11, 2015. She sold the stock on July 9, 2016, 3 days before qualifying for the long-term holding period. If Sue had waited until July 12, 2016, to sell the stock, she would have qualified for the 0 percent capital gains tax rate. Instead, the sale will now be taxed at ordinary income rates. Upon realizing this, Suehas told you that she will "fudge"...
Your supervisor has asked you to research the following situation concerning Scott and Heather Moore. Scott...
Your supervisor has asked you to research the following situation concerning Scott and Heather Moore. Scott and Heather are married and file a joint return. Scott works full-time as a wildlife biologist, and Heather is a full-time student enrolled at Online University. Scott’s earned income for the year is $36,000. Heather does not have a job and concentrates solely on her schoolwork. The university she is enrolled in offers courses only through the Internet. Scott and Heather have one child,...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalise your timesheet and head to a monthly tax-update webinar: From: Ahmed Sent: Wednesday, 16 September 2020, 3:58PM Subject: URGENT: Lisa Eastwood meeting scheduled, task assigned Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need you to examine...
Your line manager, Ahmed, has sent you the following email late on Wednesday just as you...
Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalize your timesheet and head to a monthly tax-update webinar: Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need you to examine my notes below and determine the tax consequences arising from her various activities. Lisa has recently moved to...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalise your timesheet and head to a monthly tax-update webinar: From: Ahmed Sent: Wednesday, 16 September 2020, 3:58PM Subject: URGENT: Lisa Eastwood meeting scheduled, task assigned Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need you to examine...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just...
PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalise your timesheet and head to a monthly tax-update webinar: From: Ahmed Sent: Wednesday, 16 September 2020, 3:58PM Subject: URGENT: Lisa Eastwood meeting scheduled, task assigned Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need you to examine...
Australian tax laws PART A Your line manager, Ahmed, has sent you the following email late...
Australian tax laws PART A Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalise your timesheet and head to a monthly tax-update webinar: From: Ahmed Sent: Wednesday, 16 September 2020, 3:58PM Subject: URGENT: Lisa Eastwood meeting scheduled, task assigned Good afternoon, I have just spoken with Lisa Eastwood (new client) over her tax position for the current tax year. I will be getting further documentation tomorrow; however, I need...
Read the attached articles about the proposed merger of Xerox and Fujifilm. Utilizing your knowledge of...
Read the attached articles about the proposed merger of Xerox and Fujifilm. Utilizing your knowledge of external and internal analysis, business and corporate strategy, and corporate governance, please discuss the following questions: 1. What is the corporate strategy behind the merger of Xerox and Fujifilm? 2. Why did Xerox agree to the merger? Is this a good deal for Xerox? Discuss the benefits and challenges they face with the merger. 3. Why did Fujifilm agree to the merger? Discuss the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT