3. If a tax payer sells property for cash, the amount realized consists of the net proceeds from the sale. For each of the following, indicate the effect on the amount realized.

A. the property sold on credit

B. a mortgage on the property is assumed by the buyer

C. a mortgage on the property is assumed by the seller

D. the buyer acquires the property subject to a mortgage of the seller.

E. stock that has a basis to the purchaser of $6000 and a fair market value of $10,000 is received by the seller as part as part of the consideration.


Simon owns stock that has declined in value since acquired. He has decided either to give the sock to, Fred. Or to sell it and give Fred the proceeds. If Fred receives the stock, he will sell it to obtain the proceeds. Simon is in the 15% tax bracket, while Fred‘s bracket is 25%.in either case, the holding period for the stock will be short-term. Idenify, the tax issues relevant to Simon in deciding whether to give the stock or the sale proceeds to Fred.


Comment on the following transactions:

a. Mort owns 500 shares of pear, Inc.stock with adjusted basis of $22,000. On july28, 2014, he sells 100shares for$3000. On august 16, 2014, he purchases another 100 shares for $3400. Mort realized loss of $1,400($3000-$4,400) on the July 28 sale is not recognized and his adjusted basis for the 100 shares purchased on august 16 is $4,800. Explain

B.How would your answer in (a) change if mort purchased the 100 shares on December 27, 2014, rather than august 2014?


Ira Cook is planning to make a charitable contribution to the Boy Scouts of Crystals, Inc. stock worth $20,000. The sock has an adjusted basis of $15,000. A friend has suggested that Ira sell the stock and contribute the $20,000 proceeds rather than contribute the stock.

a. Should Ira follow the friend’s advice? Why, or Why not?

B.Assume that the fair market value is only $13,000. In his case, should he follow his friend’s advice why or Why not?

C.Rather than make a charitable contribution to Boys Scouts. Ira is going to make a gift to Nancy, his niece. Advise on a and b.

D. write a letter to Ira regarding whether in a. He should sell his stock and contribute the cash or contribute the stock. He has informed you that he purchased the stock six years ago. Ira’s address is 500 Ireland Avenue Dekalb, IL 60115.

64. Louis owns three pieces of land with an adjusted basis as follows:

Parcel A. $75,000 Parcel $125,000, and parcel C. $175,000.louis sells parcel A to his uncle for $50,000, parcel B, to his partner for $120,000 and parcel C to his mother for $ 150,000.

a. What is he recognized gain or loss from the sale of each of them?

B.If Louis uncle’s eventually sells his land for $90,000, what is his recognized gain or loss?

C.If Louis partner eventually sells his land for $130,000, what is his recognized gain or loss

d. if Louis mother eventually sells her land for $165,000 what is her recognized gain or loss?