Question 1

The holding period of like-kind property received in a nontaxable exchange begins on the day of the exchange.

Accepted Answer

A) True 
 B)False  False

Question 2

An investor exchanges an office building located in Niagara Falls,NY,for an office building located in Niagara Falls,Ontario.The exchange does not qualify as like-kind.

Accepted Answer

A) True 
 B)False  True

Question 3

If the taxpayer elects to defer the gain on an involuntary conversion,the holding period of the replacement property begins on the date of purchase.

Accepted Answer

A) True 
 B)False  False

Question 4

Alex,a commercial fisherman,owns a fishing boat with a $1,600,000 basis.The boat is destroyed in a hurricane,and Alex collects $2,000,000 from the insurance company.He purchases another boat for $1,550,000.What is the amount of the gain recognized on the transaction?

Accepted Answer

A)  $400,000 
B)  $50,000 
C)  $450,000 
D)  $0 
A)  $400,000 
B)  $50,000 
C)  $450,000 
D)  $0

Question 5

In its inventory,an art dealer holds a Picasso painting for sale which has appreciated since its acquisition.The art dealer exchanges the Picasso for a Van Gogh painting of similar value.The art dealer will not recognize the gain on the Picasso because of the like-kind exchange provisions.

Accepted Answer

A) True 
 B)False

Question 6

Landry exchanged land with an adjusted basis of $50,000 for another parcel of land worth $35,000 plus $10,000 of cash.Landry held the original land for investment purposes and will do the same with the new parcel.Due to the exchange,Landry will recognize

Accepted Answer

A)  $10,000 gain. 
B)  $5,000 gain. 
C)  $5,000 loss. 
D)  $0. 
A)  $10,000 gain. 
B)  $5,000 gain. 
C)  $5,000 loss. 
D)  $0.

Question 7

An investor in artwork holds a Picasso painting which has appreciated substantially since she purchased it.The art investor exchanges the Picasso for a Van Gogh painting of similar value.The transaction qualifies as a like-kind exchange and the gain will not be recognized.

Accepted Answer

A) True 
 B)False

Question 8

Amelia exchanges a commercial fishing boat with a $350,000 adjusted basis for an airplane with a $560,000 fair market value.Both assets are for her business use.
a.What is the amount of gain or loss realized by Amelia?
b.What is the amount of gain or loss recognized by Amelia?

Accepted Answer

a.$560,000 - $350,000 = $210,0

Question 9

Where non-like-kind property other than cash is received as boot,the amount of the boot is the property's fair market value.

Accepted Answer

A) True 
 B)False

Question 10

Each of the following is true of deferral of gain attributable to the involuntary conversion of personal property with the exception of

Accepted Answer

A)  gain deferral is elective, except for direct conversions. 
B)  the replacement property may be acquired by gift, inheritance, or purchase. 
C)  qualifying replacement property must be acquired within a specified time period. 
D)  replacement property must be similar or related in service or use to the converted property. 
A)  gain deferral is elective, except for direct conversions. 
B)  the replacement property may be acquired by gift, inheritance, or purchase. 
C)  qualifying replacement property must be acquired within a specified time period. 
D)  replacement property must be similar or related in service or use to the converted property.

Question 11

A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion.

Accepted Answer

A) True 
 B)False

Question 12

Stephanie's building,which was used in her business,was destroyed in a fire.Stephanie's adjusted basis in the building was $175,000,and its FMV was $210,000.Stephanie filed an insurance claim and was reimbursed $200,000.In that same year,Stephanie invested $180,000 of the insurance proceeds in another business building.Assuming the proper election is made to defer gain,Stephanie's basis in the new building will be

Accepted Answer

A)  $175,000. 
B)  $180,000. 
C)  $200,000. 
D)  $210,000. 
A)  $175,000. 
B)  $180,000. 
C)  $200,000. 
D)  $210,000.

Question 13

Hannah,a single taxpayer,sold her primary residence on January 1,2017.Her total realized gain is $210,000.The house was acquired on January 1,2007,and rented to tenants until December 31,2013.Hannah moved in on January 1,2014,and used the house as her principal residence until the sale.During the rental period,$30,000 of depreciation was deducted.Due to the sale of the house in 2017,Hannah will recognize a gain of

Accepted Answer

A)  $147,000. 
B)  $30,000. 
C)  $90,000. 
D)  $120,000. 
A)  $147,000. 
B)  $30,000. 
C)  $90,000. 
D)  $120,000.

Question 14

Replacing a building with land qualifies as replacement property under the involuntary conversion rules relevant to a casualty.

Accepted Answer

A) True 
 B)False

Question 15

Summer exchanges an office building used in her business for another office building.Summer's office building has a FMV of $250,000 (basis of $180,000).The FMV of the new building is $300,000,and it is subject to a mortgage of $60,000,which is assumed by Summer.Summer also pays the other party $40,000 cash.
a.What is the amount of gain realized by Summer?
b.What is the amount of gain recognized by Summer?
c.What is the basis of the new building to Summer?

Accepted Answer

The answer of Summer exchanges an office building used in...

Question 16

All of the following statements are true with regard to personal residences except:

Accepted Answer

A)  Temporarily renting property that was formerly the taxpayer's principal residence does not automatically preclude the use of Sec. 121. 
B)  To qualify for favorable tax treatment under Sec. 121, the residence must be either the taxpayer's principal residence or a secondary residence. 
C)  In the case of married taxpayers, an individual may claim the exclusion even if the individual's spouse used the exclusion within the past two years. 
D)  Houseboats, house trailers, and condominium apartments may qualify as a principal residence. 
A)  Temporarily renting property that was formerly the taxpayer's principal residence does not automatically preclude the use of Sec. 121. 
B)  To qualify for favorable tax treatment under Sec. 121, the residence must be either the taxpayer's principal residence or a secondary residence. 
C)  In the case of married taxpayers, an individual may claim the exclusion even if the individual's spouse used the exclusion within the past two years. 
D)  Houseboats, house trailers, and condominium apartments may qualify as a principal residence.

Question 17

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

Accepted Answer

A)  loss of employment by the qualified individual if the individual is eligible for unemployment compensation 
B)  natural or man-made disaster resulting in a casualty to the residence 
C)  birth of one child 
D)  divorce or legal separation 
A)  loss of employment by the qualified individual if the individual is eligible for unemployment compensation 
B)  natural or man-made disaster resulting in a casualty to the residence 
C)  birth of one child 
D)  divorce or legal separation

Question 18

Pamela owns land for investment purposes.The land is worth $300,000 (basis of $260,000 to Pamela).Pamela exchanges the land,plus $20,000 cash,for a warehouse to be used in her business.The FMV of the warehouse is $400,000,but the warehouse is subject to a mortgage of $80,000,which is assumed by Pamela.Pamela must recognize a gain of

Accepted Answer

A)  $ 0. 
B)  $ 40,000. 
C)  $ 120,000. 
D)  $ 140,000. 
A)  $ 0. 
B)  $ 40,000. 
C)  $ 120,000. 
D)  $ 140,000.

Question 19

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

Accepted Answer

A) True 
 B)False

Question 20

A loss on the sale of a taxpayer's personal residence is deductible if the taxpayer owned and lived in the home for two of five years.

Accepted Answer

A) True 
 B)False

The holding period of like-kind property received in a nontaxable exchange begins on the day of the exchange.

An investor exchanges an office building located in Niagara Falls,NY,for an office building located in Niagara Falls,Ontario.The exchange does not qualify as like-kind.

If the taxpayer elects to defer the gain on an involuntary conversion,the holding period of the replacement property begins on the date of purchase.

Alex,a commercial fisherman,owns a fishing boat with a $1,600,000 basis.The boat is destroyed in a hurricane,and Alex collects $2,000,000 from the insurance company.He purchases another boat for $1,550,000.What is the amount of the gain recognized on the transaction?

In its inventory,an art dealer holds a Picasso painting for sale which has appreciated since its acquisition.The art dealer exchanges the Picasso for a Van Gogh painting of similar value.The art dealer will not recognize the gain on the Picasso because of the like-kind exchange provisions.

Landry exchanged land with an adjusted basis of $50,000 for another parcel of land worth $35,000 plus $10,000 of cash.Landry held the original land for investment purposes and will do the same with the new parcel.Due to the exchange,Landry will recognize

An investor in artwork holds a Picasso painting which has appreciated substantially since she purchased it.The art investor exchanges the Picasso for a Van Gogh painting of similar value.The transaction qualifies as a like-kind exchange and the gain will not be recognized.

Amelia exchanges a commercial fishing boat with a $350,000 adjusted basis for an airplane with a $560,000 fair market value.Both assets are for her business use. a.What is the amount of gain or loss realized by Amelia? b.What is the amount of gain or loss recognized by Amelia?

Where non-like-kind property other than cash is received as boot,the amount of the boot is the property's fair market value.

Each of the following is true of deferral of gain attributable to the involuntary conversion of personal property with the exception of

A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion.

Replacing a building with land qualifies as replacement property under the involuntary conversion rules relevant to a casualty.

All of the following statements are true with regard to personal residences except:

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

A loss on the sale of a taxpayer's personal residence is deductible if the taxpayer owned and lived in the home for two of five years.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 12: Property Transactions: Nontaxable Exchanges

The holding period of like-kind property received in a nontaxable exchange begins on the day of the exchange.

An investor exchanges an office building located in Niagara Falls,NY,for an office building located in Niagara Falls,Ontario.The exchange does not qualify as like-kind.

If the taxpayer elects to defer the gain on an involuntary conversion,the holding period of the replacement property begins on the date of purchase.

Alex,a commercial fisherman,owns a fishing boat with a $1,600,000 basis.The boat is destroyed in a hurricane,and Alex collects $2,000,000 from the insurance company.He purchases another boat for $1,550,000.What is the amount of the gain recognized on the transaction?

In its inventory,an art dealer holds a Picasso painting for sale which has appreciated since its acquisition.The art dealer exchanges the Picasso for a Van Gogh painting of similar value.The art dealer will not recognize the gain on the Picasso because of the like-kind exchange provisions.

Landry exchanged land with an adjusted basis of $50,000 for another parcel of land worth $35,000 plus $10,000 of cash.Landry held the original land for investment purposes and will do the same with the new parcel.Due to the exchange,Landry will recognize

An investor in artwork holds a Picasso painting which has appreciated substantially since she purchased it.The art investor exchanges the Picasso for a Van Gogh painting of similar value.The transaction qualifies as a like-kind exchange and the gain will not be recognized.

Amelia exchanges a commercial fishing boat with a $350,000 adjusted basis for an airplane with a $560,000 fair market value.Both assets are for her business use. a.What is the amount of gain or loss realized by Amelia? b.What is the amount of gain or loss recognized by Amelia?

Where non-like-kind property other than cash is received as boot,the amount of the boot is the property's fair market value.

Each of the following is true of deferral of gain attributable to the involuntary conversion of personal property with the exception of

A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion.

Replacing a building with land qualifies as replacement property under the involuntary conversion rules relevant to a casualty.

All of the following statements are true with regard to personal residences except:

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

A loss on the sale of a taxpayer's personal residence is deductible if the taxpayer owned and lived in the home for two of five years.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters