Question

Tan, Inc., sold a forklift on April 12, 2020, for $8,000 (its FMV) to its 100% shareholder, Ashley. Tan's adjusted basis for the forklift was $12,000. Ashley's holding period for the forklift:

Answer 1

c. Begins on April 13, 2019

Step-by-step explanation:

Options include "a. Includes Tan's holding period for the forklift. b. Begins on April 12, 2019. c. Begins on April 13, 2019. d. Does not begin until Ashley sells the forklift e. None of these. "

- Whenever a loss is being disallowed in party transaction, the norms is that there is no carryover of holding period.

- Tan has a $4,000 ($12,000 - $8,000) realized loss on the sale of the forklift to Ashley and the loss is disallowed because Ashley is a related taxpayer.

- Ashley’s holding period begins on the day after the property is acquired which is on April 13, 2019