Distinguish between realized gains and losses and recognized gains and losses.
Realized gain/loss is the gain or loss resulting from the sale or disposition of property. However, recognized gain or loss is determined to be taxable income or a deductible loss. There are many situations in which a gain or loss may be realized but may not be recognized.
On April 18, 2011, Jane Juniper purchased 30 shares of Bryan Corp. stock for $210, and on September 29, 2011, she purchased 90 additional shares for $900. On November 28, 2011, she sold 48 shares, which could not be specifically identified, for $576 and on December 8, 2011, she sold another 25 shares for $188. What is her recognized gain or loss? 30 shares for $210= $7 per share
90 share for $900= $10 per share
30 to 480 shares sold at $12 for a gain of $150 according to FIFO rules. The remain of the 48 shares sold at $12 for a gain of $36 Total gain =$186 25 shares sold at $7.52 for a loss of $62
Total Gain= $124.00
Debbie Davis and Elizabeth Engels exchanged like-kind property. Debbie hand an adjusted basis of $12,000 in her property (fair market value is $15,000). Elizabeth’s property had an adjusted basis of $9,000 and a fair market value of $10,500, and Elizabeth gave Debbie $4,500 in cash. Determine Debbie’s and Elizabeth’s realized gain or loss, recognized gain or loss, and the basis in their new property.
Property exchange Amount:$15,000$10,500
Fair Market Value:$0$4,500
Basis of New Property:$12,000$13,500
Jim Junction purchased a truck for business on November 17, 2010 fir $40,000. On July 21, 2011 he exchanged the truck for another truck in a like kind exchange. The new truck had a fair market value of $42,000. When does the holding period on the new truck begin...