Exam 12: Property Transactions: Nontaxable Exchanges

Mick owns a racehorse with a $500,000 basis used for breeding purposes.The racehorse is killed in an accident and Mick receives $750,000 from the insurance company.Mick purchases another racehorse for $400,000. a.What is the amount of Mick's realized gain? b.What is the minimum amount of Mick's recognized gain,assuming the appropriate election is made?

Dean exchanges business equipment with a $120,000 adjusted basis for $40,000 cash and business equipment with a $140,000 FMV.What is the amount of gain which Dean recognizes on the exchange?

A taxpayer exchanges an office building held as an investment asset for an office building to be used in her business.The exchange will qualify as like-kind.

Cheryl owns 200 shares of Cornerstone Corporation common stock which has an adjusted basis of $60,000 and a fair market value of $75,000.John owns 200 shares of Cable Corporation with a $75,000 fair market value. a.If Cheryl and John exchange their stock,what is the amount of Cheryl's realized gain? b.If Cheryl and John exchange their stock,what is the amount of Cheryl's recognized gain?

When an involuntary conversion is due to the condemnation of real property held for productive use in a trade or business or for investment,the replacement period will end three years after the close of the first tax year in which any part of the gain is realized.

Emily owns land for investment purposes that has a FMV of $300,000 (basis of $260,000).She exchanges the land,plus $40,000 cash,for a warehouse to be used in her business.The warehouse is worth $420,000,but is subject to a mortgage of $80,000 which Emily will assume.The gain realized by Emily on the exchange is

Daniella exchanges business equipment with a $100,000 adjusted basis for $10,000 cash and business equipment with a $96,000 FMV.What is the amount of gain recognized on the exchange?

Ron and Fay live in Buffalo.They also own a condominium in Orlando (purchased in 2011) which they rent to vacationers.Ron and Fay will be retiring.They plan to live in the Orlando property for two and a half years.When they sell it,they will be able to exclude the full gain which is expected to be about $200,000.

Kole owns a warehouse used in his business which has an adjusted basis of $240,000 and is subject to a mortgage with an $80,000 principal balance.Kole exchanges the warehouse for land worth $320,000.In addition,he receives cash of $40,000.What is Kole's realized gain?

Gena exchanges land held as an investment with a $60,000 basis for other land with a $80,000 FMV and a motorcycle with a $10,000 FMV.The acquired land is to be held for investment and the motorcycle is for personal use.What is the amount of recognized gain?

Which of the following statements with respect to a like-kind exchange is false?

Ron's building,which was used in his business,was destroyed in a fire.Ron's adjusted basis in the building was $210,000,and its FMV was $330,000.Ron filed an insurance claim and was reimbursed $300,000.In that same year,Ron invested $240,000 of the insurance proceeds in another business building.Ron's basis in the new building is

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2017,for $950,000.They have lived in the home for 20 years.The basis of the home is $350,000.They purchased a new home for $1,000,000 in August 2017.After living in that home for 219 days,the Connors were forced to sell their new home in 2018 for $1,300,000 and move to another climate due to Ellen's severe health problems. a.What is the amount of gain recognized on the home sale in 2017? b.What is the amount of the gain recognized on the home sale in 2018?

Nana is a self-employed consultant.For the past five years,she has used an extra bedroom (15% of the house) in her home as a qualifying home office and deducted $9,000 of depreciation expense.This year she sells the house for $740,000.The house cost $500,000.Nana is single.She will recognize gain on the sale of the house of

Frank,a single person,sold his home this year.He had owned and lived in the house for 10 years.Frank signed a contract on March 4 to sell his home and closed the sale on May 3. Based on these facts,what is the amount of his recognized gain?

If a principal residence is sold before satisfying the ownership and use tests,part of the gain may be excluded if the sale is due to a change in employment,health,or unforeseen circumstances.

Laurie owns land held for investment.The land's FMV is $150,000.Laurie's basis in the land is $130,000.Laurie exchanges the land,plus $20,000 of cash,for a warehouse owned by Trey.The warehouse is worth $210,000,but is subject to a mortgage of $40,000 which Laurie will assume.Trey's basis in the warehouse is $120,000.Laurie's basis in the warehouse received will be

Discuss why a taxpayer would want to avoid like-kind exchange provisions.

Lana owned a house used as a rental property for three years.During this rental period,she took $60,000 of depreciation deductions.Lana moved into the house and has used it as her principal residence for the past two years.Lana has just sold the house and realized a $200,000 gain.She will recognize gain of

For purposes of nontaxable exchanges,cash and non-like-kind property constitute boot.