Concepts Of Federal Income Tax

Kyle, a single taxpayer in the 37% tax bracket engaged in the following disposition transactions during this tax year.  You may assume the dispositions were made to unrelated parties unless told otherwise:

  1. He sold Intel stock purchased 6 months      ago for $175,000. Adjusted basis = $33,000
  2. He sold Microsoft bonds purchased 2 years      ago for $300,000. Adjusted basis = $325,000
  3. He sold a building used in business for      $3.5 million. His adjusted basis was $2 million.  Accumulated      Depreciation was $600,000.  He purchased the asset in 2011.
  4. He sold land used in business for      $800,000. His adjusted basis was $400,000
  5. He sold manufacturing equipment used in      business for $280,000. His adjusted basis was $175,000.  He      originally purchased the equipment three years ago for $325,000
  6. He sold an antique car for $1 million. He      held the car for six months and his basis in it was $925,000.
  7. Kyle’s grandfather died earlier this year      and he bequeathed stock to Kyle.  Kyle sold stock that he inherited      from his grandfather. His grandfather’s basis in the stock was      $25,000.  On the date of his grandfather’s death, the stock was worth      $60,000.  He sold it for $55,000 on 8/31.
  8. He sold investment land for $40,000. His      grandfather gifted the land to Kyle at 5 years ago.  At the time of      the gift, the land was worth $20,000 and the grandfather’s basis was      $45,000.
  9. He sold his shares of stock in his      family’s closely held corporation for $440,000. His basis in the stock was      $30,000 and it was acquired many years ago.  Kyle is an employee of      the corporation.
  10. He exchanged land held for business for      another parcel of land to be held for investment. His basis in old land      was $50,000 and he acquired it 8 months prior to the exchange.  At      the time of the exchange, his land was worth $250,000 and subject to a      mortgage of $75,000.  The other party assumed the mortgage.

Required:   Determine the tax consequences (including character) of the transactions described above.  I believe the best thing to do is to create a grid analyzing income categories (like those created in the lectures and homework) and provide a key to each transaction and explanations below the grid.  If there are long-term capital gains, please specify the rate(s) for such gains. Simple citation or labeling (e.g., 1231 or capital) will suffice. You do not have to actually compute a tax – notation of rate category will suffice. If something is vague or you feel an explanation is warranted, a simple discussion or bullet point will suffice.

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