Federal Income Tax Problems/solutions Get A Hint

Federal Income Tax Problems/SolutionsGet a hin2B 1. Would the results to the taxpayers in the Cesarini case be different if, instead of discovering $4,467 in old currency the piano, they discovered that the piano, a Steinway, was the first Steinway piano ever built and it is worth $500,000?>>> Yes; Cesarini articulates the tax consequences of finding a treasure trove: it is taxable in the year in which it is reduced to undisputed possession. Here, the higher than expected value of the item purchase itself does not constitute a treasure trove. Provided that this is an arms length transaction, TP would take a basis in the item equal to the purchase price and then upon sale of the item TP would recognize a capital gain.2B 2. Winner attends the opening of a new department store. All persons attending are given free raffle tickets for a watch worth $200. Disregarding any possible application of I.R.C. § 74, must Winner include anything within gross income when she wins the watch in the raffle?>>> Yes, $200 gross income b/c when the watch crossed the barrier of ownership TP clearly realized a $200 accession to wealth.2B 3. Employee has worked for Employer's incorporated