Question 1

The receipt of boot as part of a nontaxable exchange causes a realized loss to be recognized.

Accepted Answer

A) True 
 B)False

Question 2

Kevin exchanges an office building used in his business for another office building worth $200,000 plus $30,000 cash.The FMV of Kevin's old building is $280,000 (basis $150,000) and it is subject to a mortgage of $50,000.The mortgage is assumed by the other party.
a.What is the amount of gain realized by Kevin?
b.What is the amount of gain recognized by Kevin?
c.What is the basis of the new building to Kevin?

Accepted Answer

a.
 @#IMG-DLM& b.This is a qualifying like-kind ex

Question 3

Marinda exchanges an office building worth $800,000 (basis is $820,000) for a warehouse worth $850,000.As part of the exchange she also transfers $50,000 worth of securities which she purchased for $40,000.
a. What are Marinda's realized and recognized gains (losses) on the two assets exchanged?
b. What is Marinda's basis in the warehouse acquired?

Accepted Answer

a.
 @#IMG-DLM& Loss cannot be recognized on like-k

Question 4

The Smiths owned and occupied their principal residence,with an adjusted basis of $250,000,for ten years.The house is destroyed by a tornado and the Smiths receive insurance proceeds of $800,000.Six months later,they purchase another residence for $850,000.
a.What is the amount of gain the Smiths must recognize?
b.What is the basis of the new residence?

Accepted Answer

The answer of The Smiths owned and occupied their principal...

Question 5

The involuntary conversion provisions which allow deferral of gain are mandatory.

Accepted Answer

A) True 
 B)False

Question 6

The taxpayer must be occupying the residence at the time of the sale in order for Sec.121 to apply.

Accepted Answer

A) True 
 B)False

Question 7

A owns a ranch in Wyoming,which B offers to purchase.A is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana.The complex is available for sale.B purchases the apartment complex in Louisiana from C and transfers it to A in exchange for A's ranch.The ranch and the complex each have a $1,000,000 fair market value.Which of the following is true?

Accepted Answer

A)  The transaction qualifies as a like-kind exchange for B but not for A. 
B)  The transaction qualifies as a like-kind exchange for both B and A. 
C)  The transaction qualifies as a like-kind exchange for A but not for B. 
D)  The transaction does not qualify as a like-kind exchange for either B or A. 
A)  The transaction qualifies as a like-kind exchange for B but not for A. 
B)  The transaction qualifies as a like-kind exchange for both B and A. 
C)  The transaction qualifies as a like-kind exchange for A but not for B. 
D)  The transaction does not qualify as a like-kind exchange for either B or A.

Question 8

Sometimes taxpayers should structure a transaction to avoid the application of like-kind provisions.Which of the following conditions is likely to cause a taxpayer to avoid like-kind treatment?

Accepted Answer

A)  expected higher tax rates in the future 
B)  less accelerated depreciation provisions expected in the future 
C)  a decline in the value of the asset being disposed of 
D)  None of the above. 
A)  expected higher tax rates in the future 
B)  less accelerated depreciation provisions expected in the future 
C)  a decline in the value of the asset being disposed of 
D)  None of the above.

Question 9

Rosa exchanges business equipment with a $60,000 adjusted basis for a like-kind piece of equipment with a $100,000 FMV and $20,000 of marketable securities.What is Rosa's basis for the new equipment?

Accepted Answer

A)  $60,000 
B)  $80,000 
C)  $100,000 
D)  $120,000 
A)  $60,000 
B)  $80,000 
C)  $100,000 
D)  $120,000

Question 10

Indicate with a "yes" or a "no" which of the following are like-kind exchanges.
a.Computer used in trade or business for office furniture used in trade or business.
b.Apartment building held as an investment for an office building used in trade or business.
c.Land used in trade or business for equipment used in trade or business.
d.Printer used in trade or business for printer used for personal purposes.
e.Exchange of improved real estate held for investment for unimproved real estate held for investment.

Accepted Answer

a.No; b.Ye

Question 11

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Accepted Answer

A) True 
 B)False

Question 12

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

Accepted Answer

Under Sec.121,if Ike and Tina own and li

Question 13

All of the following are true except

Accepted Answer

A)  a nonsimultaneous exchange may never qualify as a like-kind exchange. 
B)  nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
C)  a loss may be recognized on non-like-kind property (boot) if the taxpayer transfers the boot in an otherwise like-kind exchange. 
D)  the holding period of like-kind property received includes the holding period of the property exchanged. 
A)  a nonsimultaneous exchange may never qualify as a like-kind exchange. 
B)  nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
C)  a loss may be recognized on non-like-kind property (boot) if the taxpayer transfers the boot in an otherwise like-kind exchange. 
D)  the holding period of like-kind property received includes the holding period of the property exchanged.

Question 14

In a nontaxable exchange,Henri traded in a truck having an adjusted basis of $8,500 and a FMV of $10,000,for a new truck having a FMV of $15,000.In addition,Henri paid cash of $5,000.What is Henri's basis in the new truck?

Accepted Answer

A)  $5,000 
B)  $8,500 
C)  $13,500 
D)  $15,000 
A)  $5,000 
B)  $8,500 
C)  $13,500 
D)  $15,000

Question 15

Discuss the rules regarding the holding period for like-kind property received in a nontaxable exchange.

Accepted Answer

The holding period of like-kind property

Question 16

If a taxpayer owns more than one home,she can designate the home that will be considered her principal residence for purposes of the Sec.121 exclusion.

Accepted Answer

A) True 
 B)False

Question 17

William and Kate married in 2017 and purchased a new home together.Each had owned and lived in separate residences for the past 5 years.William's adjusted basis in his old residence was $200,000; Kate's adjusted basis in her old residence was $120,000.In late 2017,William sells his residence for $500,000 while Kate sells her residence for $190,000.What is the total gain to be excluded from these transactions in 2017?

Accepted Answer

A)  $0 
B)  $250,000 
C)  $320,000 
D)  $370,000 
A)  $0 
B)  $250,000 
C)  $320,000 
D)  $370,000

Question 18

Indicate with a "yes" or a "no" which of the following are like-kind exchanges (assume all assets are held for business or investment purposes).
a.Exchange of common stock held as an investment for land held as an investment.
b.Exchange of farmland for an apartment building.
c.Exchange of office furniture used in trade or business for computer used in a trade or business
d.Exchange of unimproved real estate for improved real estate.
e.Exchange of a pickup truck used in trade or business for bulldozer used in trade or business

Accepted Answer

a.No; b.Ye

Question 19

The building used in Terry's business was condemned by the city of St.Louis.Terry received a condemnation award of $125,000.He paid $1,200 in lawyer's fees and $800 for an appraisal of the property.Terry's adjusted basis in the building was $60,000.Terry reinvests in similar property costing $110,000,and Terry makes the proper election regarding the property.What is the amount of Terry's recognized gain on the condemnation?

Accepted Answer

A)  $15,000 
B)  $13,000 
C)  $50,000 
D)  $63,000 
A)  $15,000 
B)  $13,000 
C)  $50,000 
D)  $63,000

Question 20

May a taxpayer elect under Sec.1033 to defer recognition of loss resulting from an involuntary conversion?

Accepted Answer

Sec.1033 does not apply to los

The receipt of boot as part of a nontaxable exchange causes a realized loss to be recognized.

The involuntary conversion provisions which allow deferral of gain are mandatory.

The taxpayer must be occupying the residence at the time of the sale in order for Sec.121 to apply.

Sometimes taxpayers should structure a transaction to avoid the application of like-kind provisions.Which of the following conditions is likely to cause a taxpayer to avoid like-kind treatment?

Rosa exchanges business equipment with a $60,000 adjusted basis for a like-kind piece of equipment with a $100,000 FMV and $20,000 of marketable securities.What is Rosa's basis for the new equipment?

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

All of the following are true except

In a nontaxable exchange,Henri traded in a truck having an adjusted basis of $8,500 and a FMV of $10,000,for a new truck having a FMV of $15,000.In addition,Henri paid cash of $5,000.What is Henri's basis in the new truck?

Discuss the rules regarding the holding period for like-kind property received in a nontaxable exchange.

If a taxpayer owns more than one home,she can designate the home that will be considered her principal residence for purposes of the Sec.121 exclusion.

May a taxpayer elect under Sec.1033 to defer recognition of loss resulting from an involuntary conversion?

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 receipt of boot as part of a nontaxable exchange causes a realized loss to be recognized.

The involuntary conversion provisions which allow deferral of gain are mandatory.

The taxpayer must be occupying the residence at the time of the sale in order for Sec.121 to apply.

Sometimes taxpayers should structure a transaction to avoid the application of like-kind provisions.Which of the following conditions is likely to cause a taxpayer to avoid like-kind treatment?

Rosa exchanges business equipment with a $60,000 adjusted basis for a like-kind piece of equipment with a $100,000 FMV and $20,000 of marketable securities.What is Rosa's basis for the new equipment?

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

All of the following are true except

In a nontaxable exchange,Henri traded in a truck having an adjusted basis of $8,500 and a FMV of $10,000,for a new truck having a FMV of $15,000.In addition,Henri paid cash of $5,000.What is Henri's basis in the new truck?

Discuss the rules regarding the holding period for like-kind property received in a nontaxable exchange.

If a taxpayer owns more than one home,she can designate the home that will be considered her principal residence for purposes of the Sec.121 exclusion.

May a taxpayer elect under Sec.1033 to defer recognition of loss resulting from an involuntary conversion?

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