Tax Transactions
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1.
Alex is a calendar year sole proprietor. He began business on December 1, this year. He uses the accrual method of accounting. Alex had the following collections in December. Collected $7,000 in December, from clients who paid cash for services to be performed next year. Collected $5,000 in December, for services performed during December; deposited in an operating account on December 31, this year.
Collected $9,000 in December; on accounts receivable for services performed in December; deposited in operating account on January 2, next year.
What is the amount Alex must include in his income for December?
a. $7,000
b. $12,000
c. $14,000
d. $21,000
2.
Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $85,000 and an adjusted basis of $110,000 to Kathleen's grandfather. One year later, Kathleen sold the land for $105,000. What was her gain or (loss) on this transaction?
a. No gain or loss
b. ($ 5,000)
c. $20,000
d. $25,000
3.
Dale gave property with a basis of $1,600 to Sarah when it had a FMV of $1,200. Sarah later sold the property for $2,200 resulting in a recognized gain of
a. $-0-.
b. $400.
c. $600.
d. $1,200.
4.
Mr. Moore inherited 1,000 shares of Corporation Zero stock from his father who died on March 4, of the current year. His father paid $30 per share for the stock on September 2, 1975. The FMV of the stock on the date of death was $50 per share. On September 4 this year, the FMV of the stock was $55 per share. Mr. Moore sold the stock for $65 per share on December 3. What is the amount and nature of any gain or loss?
a. $ 10,000 LTCG
b. $ 10,000 STCG
c. $ 15,000 LTCG
d. $ 15,000 STCG
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Solution Summary
This solution contains various questions and answers regarding gifted peoperty, accruals, and inherited property.
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1. Alex
Using the U.S. Master Tax Guide copyrighted in 2005 by CCH Incorporated
The advanced receipt of income is income for the current year so add the $7,000 plus $5,000 plus the $9,000 for late deposit gives an amount of $21,000 and that gives answer D, you are correct.
2. Kathleen, yes at ...
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