personal use.? Amount Realized. Tracy owns a nondepreciable capital asset held for investment. The asset
was purchased for $250,000 six years earlier and is now subject to a $75,000 liability.
During the current year, Tracy transfers the asset to Tim in exchange for $94,000 cash and
a new automobile with a $50,000 FMV to be used by Tracy for personal use; Tim assumes
the $75,000 liability. Determine the amount of Tracy’s LTCG or LTCL

Sale of Property Received as a Gift. During the current year, Stan sells a tract of land for
$800,000. The property was received as a gift from Maxine on March 10, 1995, when the
property had a $310,000 FMV. The taxable gift was $300,000 because the annual exclusion
was $10,000 in 1995. Maxine purchased the property on April 12, 1980, for
$110,000. At the time of the gift, Maxine paid a gift tax of $12,000. In order to sell the
property, Stan paid a sales commission of $16,000.
a. What is Stan’s realized gain on the sale?
b. How would your answer to Part a change, if at all, if the FMV of the gift property was
$85,000 as of the date of the gift?


Basis of Property Converted from Personal Use. Irene owns a truck costing $15,000 and
used for personal activities. The truck has a $9,600 FMV when it is transferred to her
business, which is operated as a sole proprietorship.
a. What is the basis of the truck for determining depreciation?
b. What is Irene’s realized gain or loss if the truck is sold for $5,000 after claiming depreciation
of $4,000?