Question

1. PR.02-18 a. Simone purchases 300 shares of Wilguess, Inc., stock in 2017 for $6,300. In 2017 and 2018, Wilguess pays cash dividends of $2 per share. In 2019, Wilguess pays a 40% stock dividend (nontaxable), and Simone receives an additional 120 shares of stock. 2. PR.02-23 The receipt of the cash dividend is taxable and Simone's basis in the stock after the cash dividend is s 3. PR.02-26 The receipt of the stock dividend is nontaxable and Simone's basis in the stock after the stock dividend is s 4. PR.02-28 Feedback 5. PR.02-33 Check My Work 6. PR.02-38 No income is realized until the amount invested has been recovered. 7. PR.02-40.ALGO 8. PR.02-41 b. Symbol Corporation purchases a building in 2016 at a cost of $240,000. Annual maintenance costs on the building are $80,000. In 2018, Symbol adds a wing to the building at a cost of $60,000. In 2019, the building is painted at a cost of $25,000. Symbol deducts $4,800 in depreciation in 2016, $7,300 in 2017, and $8,100 in 2018 and 2019. 9. PR.02-43 10. PR.02-44 The depreciation reduces the basis of the building. The adjusted basis at the end of 2019 is $ 11. PR.02-49 Fandback 12. PR.02-60 Check My Work Partially correct 13. PR.02-61 c. Lorissa purchases land as an investment in 2017 for $33,000. Property taxes on the property are $400 per year. In 2018, Lorissa is assessed $2,000 by the county assessor for her share of a sidewalk that the county builds adjacent to the land. Lorissa pays the assessment in 2019. a deductible tax. The property taxes are deducted in the year paid and do not affect the basis. The assessment for the sidewalk is not Therefore, it must be added to the basis of the land, resulting in an adjusted basis of $ at the end of 2019. Check My Work < Previous Progress: 13/13 items

Answer 1

(a)

Taxable dividend does not reduce basis in stock. Basis in stock remains at $6,300

Non-taxable stock dividend does not alter basis in stock. Basis in stock remains at $6,300

(b)

Adjusted basis in building is:

Particulars	Amount
Purchase	$ 240,000
Wing cost	$   60,000
Less: depreciation
2016	$    (4,800)
2017	$    (7,300)
2018	$    (8,100)
2019	$    (8,100)
Adjusted basis	$ 271,700

Annual maintenance and painting costs are not capitalized.

(c)

Basis in land = $33,000 + 2,000 = $35,000