Author Question: Mike, a dealer in securities and calendar-year taxpayer, purchased a security for inventory on ... (Read 41 times)

maegan_martin · **on:** Sep 13, 2020

Question 1

Kate subdivides land held as an investment and Section 1237 is satisfied. The lots sell for $30,000 per lot (basis $10,000). Kate sells five lots in the first year. Kate's ordinary income is
◦ $0.
◦ $20,000.
◦ $100,000.
◦ $150,000.

Question 2

Mike, a dealer in securities and calendar-year taxpayer, purchased a security for inventory on November 18, 2015 for $15,000. The FMV on December 31, 2015 was $16,000. The security was sold on December 19, 2016 for $16,500. These transactions result in
◦ $0 ordinary income in 2015; $1,500 ordinary income in 2016.
◦ $0 ordinary income in 2015; $1,500 LTCG in 2016.
◦ $1,000 ordinary income in 2015; $500 LTCG in 2016.
◦ $1,000 ordinary income in 2015; $500 ordinary income in 2016.

blakeserpa · **Reply #1 on:** Sep 13, 2020

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