25 May Question 1. Marilyn owns 100% of the stock of Lilac, Inc., with an adjusted
Question
1. Marilyn owns 100% of the stock of Lilac, Inc., with an adjusted basis of $45,000. She receives a cash distribution of $160,000 from Lilac when its earnings and profits are $90,000.
a. What is Marilyn’s dividend income?
b. What is Marilyn’s recognized gain or loss?
c. What is Marilyn’s adjusted basis for her stock after the distribution?
.
2. Hilary receives $10,000 for a 15-foot wide utility easement along one of the boundaries to her property. The easement provides that no structure can be built on that portion of the property. Her adjusted basis for the property is $200,000 and the easement covers 15% of the total acreage. Determine the effect of the $10,000 payment on Hilary’s gross income and her basis for the property.
3. Ollie owns a personal use car for which he originally paid $48,000. He trades the car in on a sports utility vehicle (SUV) paying the automobile dealer cash of $30,000. If the negotiated price of the SUV is $49,000, what is Ollie’s recognized gain or loss and his adjusted basis for the SUV?
4. Omar has the following stock transactions during 2014:
| Stock | Date purchased | Number of shares sold |
Number of shares |
Basis | Selling price |
| Orange | 1/2012 | 100 | $1,000 | ||
| Blue | 6/2012 | 200 | 3,000 | ||
| Yellow | 4/2013 | 50 | 1,250 | ||
| Blue | 2/2014 | 150 | 1,800 | ||
| Yellow | 3/2014 | 175 | 5,250 | ||
| Blue | 7/2014 | 250 | $3,500 | ||
| Yellow | 11/2014 | 200 | 7,200 |
a. What is Omar’s recognized gain or loss on the stock sales if his objective is to minimize the recognized gain and to
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