Individual Taxation - Basis

Question 1

How do you determine a taxpayer’s basis for dividend stock (generally)?

Answer 1

Generally a taxpayer’s basis for original stock is allocated to the dividend stock in proportion to fair market values. Note that this is NOT the case for dividends on preferred stock

Question 2

How do you determine a taxpayer’s basis for dividends on preferred stock?

Answer 2

The basis for the dividend shares will be equal to the FMV on the date of distribution

Question 3

T/F

A special assessment for installation of a sewer system is deductible in calculating itemized deductions from AGI

Answer 3

FALSE

This would be added to the basis of the residence

Question 4

The amount of a personal casualty loss is computed as ___

Answer 4

The lesser of the Adjusted Basis of the Property OR the Decline in the Property’s FMV as a result from the casualty.