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Practice CPA®CPA TCP Practice Exam 5Question 59

Medium1 markMultiple Choice

Area I: Individual Compliance and PlanningTCPProperty TransactionsGift Tax

CPA · Question 59 · Area I: Individual Compliance and Planning

A taxpayer receives a gift of property with a basis of $10,000 and FMV of $8,000. The taxpayer sells the property later for $9,000. What is the gain or loss?

Answer options:

A.

No Gain or Loss

B.

$1,000 Gain

C.

$1,000 Loss

D.

$2,000 Gain

How to approach this question

Dual Basis Rule for Loss Property Gifts: 1. Gain Basis = Donor's Basis ($10k). 2. Loss Basis = FMV ($8k). 3. If sold between ($9k), no gain or loss.

Full Answer

A.No Gain or Loss✓ Correct

IRC §1015. If the sale price falls between the donor's adjusted basis and the FMV at the date of the gift, no gain or loss is recognized.

Common mistakes

Using donor's basis for everything.

Question 58 All questions Question 60

Practice the full CPA TCP Practice Exam 5

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