1. Miriam received nontaxable stock rights on June 4, 2010. She allocated $12,000 of the $60,000 basis for the associated stock to the stock rights. The stock rights expire on August 14, 2010. What is Miriam's recognized loss on the expiration of the stock rights?
a. $0.
b. $12,000.
c. $60,000.
d. $72,000
e. None of the above.
2. Harlow owned the following lots of Pansy Corporation stock.
|
Purchase date
|
No. of shares
|
Basis
|
|
October 1, 2007
|
50
|
$ 4,500
|
|
February 8, 2008
|
50
|
5,500
|
|
September 5, 2008
|
100
|
12,000
|
On October 12, 2010, 100 shares of stock were sold for $14,000. Harlow did not specifically identify the shares of stock sold. What is the recognized gain or loss?
a. $0.
b. $2,000.
c. $3,000.
d. $4,000.
e. None of the above.
3. Lucy gives her sister a machine to use in her business with a fair market value of $10,500 and a basis in Lucy's hands of $9,500. What is the sister's basis for depreciation (cost recovery)?
a. $0.
b. $1,000.
c. $9,500.
d. $10,500.
e. None of the above.