Exam 12: Special Property Transactions

The state condemned Cassidy's land on November 25,2014.The land has a $400,000 basis.Cassidy received insurance proceeds of $610,000 on January 27,2015.Cassidy has until what date to defer the gain under the involuntary conversion rules?

The installment method cannot be used to report gain from the sale of stock or securities that are traded on an established securities market.

On June 15,2014,Roco sold land held for investment to Scotty for $100,000 cash and an installment note of $500,000 payable in five equal annual installments beginning on June 15,2015,plus interest at 10%.Roco's basis in the land is $300,000.What amount of gain is recognized in 2014 under the installment method?

Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

Jasmine sold land for $250,000 in 2014.The land had a basis of $118,000 and she incurred selling expenses of $10,000.Jasmine received $50,000 cash down in 2014 and will receive five additional annual payments of $40,000 each.What is Jasmine's gross profit percentage on the sale?

A wash sale occurs when:

Which of the following relationships are considered related parties?

The receipt of boot in a like-kind exchange causes the recognition of a realized gain.

The IRC Section 121 exclusion of gain on the sale of a residence applies to the taxpayer's principal residence and a vacation home.

The like-kind exchange provisions are elective provisions.

When a loss is disallowed under the related party loss rules,the loss:

On an involuntary conversion,gain is recognized to the extent of the lower of gain realized or the proceeds not used for replacement.

The purpose of the wash sale rules is to disallow a tax loss on the sale of securities where the ownership of a company is not reduced.

To postpone any gain on an involuntary conversion,the taxpayer must purchase qualifying replacement property that is "similar or related in service or use" to the property involuntarily converted.

On December 28,2014,Shelia sold 300 shares of Power Inc.,(a publicly traded company)at a loss of $5,900.On January 5,2015,Shelia repurchased 300 shares of Power Inc.

Samantha exchanges a truck used in her business with Phyllis for another truck.The basis of Samantha's old truck is $25,000,FMV is $33,000,and she gives Phyllis cash of $7,000.Phyllis's basis in her truck is $35,000 and its FMV is $40,000.What is Samantha's adjusted basis in the new truck she receives?

The installment method cannot be used to report the gain on which of the following assets?

Exchange of one partnership interest for another partnership interest qualifies as a like-kind exchange.

Sanjay exchanges a warehouse he uses in his rental business for a building owned by Sidney which he will use in his rental business.The adjusted basis of Sanjay's building is $320,000 and the fair market value is $500,000.The adjusted basis of Sidney's warehouse is $160,000 and the fair market value is $500,000.Which of the following statements is correct?

Jane and Jason (married taxpayers)sell their personal residence in 2014.In order to exclude the maximum gain allowed for married couples on the sale of the residence,they must: