I need help with the following questions. Please note that these
questions are not current homework or exam questions. They are
questions from past exams that are available to all students in the
library. I need the answers to check to make sure the answers I came
up with are correct.

To the extent possible please answer citing specific Internal Revenue
Code and/or Regulation Sections. Case cites would also be helpful.
Beyond the basic answer to each question, I would also like to
understand WHY the question is worded the way it is. In other words,
what specific issues does the question raise, and are there any
underlying policy issues and/or conflicts.

I have a full set of class notes and a course outline that would
probably help in terms of formulating the type of answer I am looking
for - only problem is we are talking about 90+ pages of MS word docs
and Google won't let me post my e-mail. If the answers can be reached
without the notes/outline great - but if you can think of a way for me
to get that to you please let me know.

Also - and as if this assignment wasn't tough enough - I need the
answers by 3am on 12/14. I am spending the day doing the practice
exams and I will need to check them by 9am on 12/14 since my in class,
proctored exam is later that day.


Uncle promises to transfer 100 shares of stock to nephew Willie, age
16, if Willie refrains from smoking,
drinking and spitting on the sidewalk until he reaches the age of 21.
Uncle bought the stock for $5,000
some years ago. On reaching his 21st birthday, Willie tells Uncle that
he has refrained from doing the
things ju st name d and Uncle hand s over the s tock, now worth $
20,00 0. Willie waits a few days and sells
the stock for $21 ,000.
How should these events be treated for income tax purposes?

Smith died owning Blackacre having a value of $100,000 but subject to
a non-recourse mortgage of
$115 ,000. S mith=s daughter, D, inherited the property subject to the
mortgage. Years passed. D made
paymen ts on the m ortgage re ducin g the un paid pr incipal b alance
to $ 105,0 00. Sh e then so ld the pr operty
subject to the m ortgage (as reduc ed) receiving $ 5,000 ca sh from the b uyer.
How much gain or loss, if any, should D report on the sale?

Higgle, Barter & Truck (HBT), a partnership, operates a large tire and
auto parts store on premises leased
from Bluehill Shopping Center. A clause in HBT=s lease, wh ich has e
ight years to ru n, proh ibits Blu ehill
from renting shopping-center space to any competitive retailer.
Bluehill now wants to rent substantial
space to Sears, a n ational chain w hich sells tires and au to parts
along w ith other produ cts. Bluehill offers
to reduce HBT=s annual rent by 25% if HBT will waive the restriction
on leasing to a competitor, but
HBT refuses. So on after, Sears itself enters into negotiations with
HBT, as a result of which Sears offers,
in exchan ge for the waiver, to p ay HBT 10% o f Sears= annual
revenues from tire and auto part sales for
the remaining term of HBT=s lease. HBT accepts.
How sh ould the affected parties treat Sears= annual payments for
income tax purposes?

Mr. X bought 10 acres of land some years ago for $200,000. Recently,
he received an offer from a
housing developer to buy the land for $300,000. X refused the offer.
The State has now condemned a
narrow strip across X=s property for the purpose of installing
overhead power lines and has awarded X the
sum of $6,000 as compensation. The State authority has advised X that
it will remove the overhead lines
when it finally installs un dergroun d power lin es, but it canno t
say with certainty when that will be done.
How shou ld X treat the $6,000 con demnation award for income tax purposes?

(A) Amon g the many tax proposals floating around W ashington these
days, one would permit business
taxpayers -- corporation s and others -- to exp ense (that is, dedu ct
in one year) the full cost o f machinery
and equipment rather than, as at present, capitalizing such
expenditures and recovering them through
annual allow ances for dep reciation.
Would this pro posal, if ad opted, b e welcom e to policy-m akers wh o
supp ort a consu mption tax? If no t,
why not? If so, why?
(B) Your esteemed instructor made the point in class (or tried) that
anti-arbitrage provisions like '265 and
'469 are chiefly aimed at protecting the taxability of personal service income.
A foreign visitor to the class was heard to remark afterwards that he
couldn=t under stand a w ord the o ld
boy was saying. P lease explain th e point to our visitor B very brie fly.

Jones le ased pre mises for 6 years to a com mercial ten ant, Z, w ho
wish ed to mo dify the pre mises for h is
own special use as a health gym. Z was required under the lease to
restore the premises to their original
condition (that of a retail store) on termination of the lease. Z
became concerned, after 3 years had passed
and the costs of restoration steadily increased, about how much he
would have to spend to make the
restoration when the lease finally came to an end. To protect himself
against rising costs, Z paid Jones
$25,000 in consideration of Jones= releasing Z from his obligation to
restore the premises.
How shou ld the two parties treat the payment for income tax purposes?