On September 18, 2016, Jerry Received Land and a Building

question 210

Essay

On September 18, 2016, Jerry received land and a building from Ted as a gift. Ted had purchased the land and building on March 5, 2013, and his adjusted basis and the fair market value at the date of the gift were as follows:
Ted paid no gift tax on the transfer to Jerry.

a.​Determine Jerry's adjusted basis and holding period for the land and building.
b.​Assume instead that the FMV of the land was $89,000 and the FMV of the building was $60,000. Determine Jerry's adjusted basis and holding period for the land and building.

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Definitions:

Corporate Tax Rate

The percentage of a corporation's profits that it must pay as tax to the government.

Straight Line Basis

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Working Capital

The difference between a company's current assets and its current liabilities, representing the short-term liquidity and operational efficiency of the company.