Exam 12: Property Transactions: Nontaxable Exchanges

Pierce sold his home this year.He had owned and lived in the house for 10 years.Pierce signed a contract on March 4 to sell his home. Based on these facts,what is the amount of his recognized gain?

Jason owns a warehouse that is used in business.The FMV of the warehouse is $200,000 (basis $120,000),and the warehouse is subject to a mortgage of $40,000.Jason exchanges the warehouse for land valued at $150,000.The other party also pays him $10,000 cash and assumes the mortgage on the warehouse.Jason's basis in the land received will be

Kai owns an apartment building held for investment purposes.The apartment building is worth $500,000,although it is subject to a mortgage of $100,000.Kai's basis in the apartment building is $380,000.Kai exchanges the apartment building for an office building.The office building has an FMV of $350,000.Kai receives $50,000 cash in addition to receiving the office building,and the other party assumes the apartment building mortgage.What is Kai's recognized gain on this exchange?

Alex owns an office building which the state condemns on January 15,2017.Alex receives the condemnation award on April 1,2017.In order to qualify for nonrecognition of gain on this involuntary conversion,what is the last date for Alex to acquire qualified replacement property?

If related taxpayers exchange property qualifying for a like-kind exchange,the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

An exchange of inventory for inventory of a like kind qualifies as a like-kind exchange.

Trent,who is in the business of racing horses,exchanges a racehorse with a basis of $80,000 for $40,000 cash and a trotter (another racehorse) with a $150,000 fair market value. a.What is the amount of gain realized by Trent? b.What is the amount of gain recognized by Trent? c.What is the adjusted basis of the trotter?

A sale of property and subsequent purchase of like-kind property may be treated as a like-kind exchange if the two transactions are interdependent.

Juan's business delivery truck is destroyed in an accident.He paid $40,000 for the truck,and $30,000 of depreciation has been deducted during its period of use.The insurance company pays Juan $32,000 due to the accident.What is the minimum amount that Juan must spend on a new truck to avoid any gain recognition?

All of the following conditions would encourage a taxpayer to avoid like-kind exchange treatment on the disposition of an otherwise qualifying asset except

Generally,a full exclusion of gain under Sec.121 upon the sale of a personal residence applies to only one sale or exchange every

Which of the following statements is not correct regarding the compliance requirements of an involuntary conversion?

The exchange of a partnership interest for an interest in another partnership qualifies as a like-kind exchange.

Bob and Elizabeth Brown,a married couple,sell their personal residence to Tamel.Tamel pays $660,000 and assumes their $90,000 mortgage.To make the sale Browns pay $20,000 in commissions and $10,000 in legal costs.The couple has owned and lived in the house for seven years and their tax basis is $200,000.What is the amount of gain recognized on the sale?

Which of the following statements regarding involuntary conversions is incorrect?

Glen owns a building that is used in business.The building is worth $200,000,but is subject to a mortgage of $40,000.Glen's basis in the building is $120,000.Glen exchanges the building for investment land worth $150,000 plus $10,000 cash.In addition,the other party assumes the mortgage which will be held for investment.Glen must recognize a gain of

Theresa owns a boat that is held for personal use and has a $100,000 basis.The boat is destroyed by a storm and Theresa collects $120,000 from the insurance company.She purchases a new $150,000 boat for personal use and elects to defer any gain on the transaction.What is the basis of the new boat?

Bobbie exchanges business equipment (adjusted basis $160,000) for other business equipment that has a FMV of $140,000.Bobbie also receives $30,000 cash.Bobbie's basis in the new equipment is

Patricia exchanges office equipment with an adjusted basis of $20,000 for $5,000 cash and office equipment with a fair market value of $12,000. a.What is the gain or loss realized? b.What is the gain or loss recognized? c. What is the adjusted basis of the new office equipment?

If property is involuntarily converted into similar property,the basis and holding period of the converted property carry over to the basis and holding period of the replacement property.