R3-M1

Question 1

Donee basis of gift and holding period=

Answer 1

-GR: donor’s basis and holding period

Question 2

When does donee basis= FMV

Answer 2

When gift is sold at amt lower than FMV and Cost
(Loss on sale)
-Holding period becomes date of gift

Question 3

G/L is not recognized on sale of a gift or inheritance when:

Answer 3

Sale price is between basis and FMV

Question 4

Basis of inherited property when alternative valuation is elected:

Answer 4

Earlier of
-FMV @ date of sale
OR
-FMW @ lower valuation date (6 months later)

Question 5

Lower valuation date=

Answer 5

-max six months from date of death “buried 6ft under”
OR
-disposal date

Question 6

Holding period for inherited property

Answer 6

Automatically Long-term

Question 7

When does the De Minimus Rule apply?

Answer 7

• must have a written accounting policy
• max deduction of assets under $5,000
• for short term property
• When no applicable FS exists-$2,500 max

Question 8

Safe Harbor deduction=

Answer 8

Costs related to a building not exceeding the lesser of:
-2% unadjusted basis
OR
-$10,000

Question 9

Qualifying small taxpayer for safe harbor deduction:

Answer 9

• average annual gross receipts of $10 million or less during last 3 tax years
• building unadjusted basis does not exceed $1 million

Question 10

Basis of property=

Answer 10

Cost of basis+debt assumed