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6(a) Consider the following three statements:...

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6(a) Consider the following three statements: (1) Tom invests in vacant land for the purpose of realizing a profit on its appreciation. He leases the land during the period he holds it. The unadjusted basis of the property is $25,000 and its fair market value is $35,000. The lease payments are $4,000 per year. (2) A rancher owns land with an unadjusted basis of $25,000 and a fair market value of $35,000. He used it for ranching purposes in the two prior years. In the current year, he leases the land to another rancher for $400. (3) Peggy, an automobile dealer, rents cars held for sale by the dealership to customers who are having their own cars repaired by the dealership. In which of the three cases above could the rental activity automatically be considered a passive activity? a. Case 1 only. b. Case 2 only. c. Case 3 only. d. Cases 1 and 2 e. None of the above. 6(b) Tina, an unmarried taxpayer, has $80,000 in salary, $10,000 in income from a limited partnership, and a $26,000 passive loss from a real estate rental activity in which she actively participates. Her modified adjusted gross income is $80,000. Of the $26,000 loss, how much is deductible? a. $0. b. $10,000. c. $25,000. d. $26,000. e. Some other amount. 6(c) Jan dies in 2009 owning a passive activity with an adjusted basis of $60,000. Its fair market value at that date is $65,000. Suspended losses relating to the property were $15,000. Which of the following statements is true? a. The heir's adjusted basis is $65,000, and Jan's final deduction is $10,000. b. The heir's adjusted basis is $65,000, and Jan's final deduction is $15,000. c. The heir's adjusted basis is $60,000, and Jan's final deduction is $15,000. d. The heir's adjusted basis is $80,000, and Jan has no final deduction. e. None of the above. 6(d) Identify from the list below the type of disposition of a passive activity where the taxpayer keeps the suspended losses of the disposed activity and utilizes them on a subsequent taxable disposition. a. Disposition of a passive activity by bequest. b. Nontaxable deferred exchange of a passive activity. c. Disposition of a passive activity as a gift. d. Complete sale of a passive activity. e. None of the above.

 

Paper#9281 | Written in 18-Jul-2015

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