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Exam 12: Property Transactions: Nontaxable Exchanges

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Question 51

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Real property exchanged for personal property qualifies as a like-kind exchange.

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Question 52

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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?

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.

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Question 53

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Which of the following statements is not true with regard to like-kind exchanges?

The exchange of a personal-use automobile for stock in an automobile manufacturer held as an investment qualifies for like-kind treatment.

Amelia exchanges an office building with a $350,000 adjusted basis for an airplane with a $560,000 fair market value to be used in business. a. What is the amount of gain or loss realized by Amelia? b. What is the amount of gain or loss recognized by Amelia?

All or part of gain realized on an involuntary conversion is deferred but not permanently excluded if qualifying replacement property is acquired within the requisite period of time.

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

On May 1 of this year, Ingrid sold her personal residence for $250,000. Commissions on the sale were $20,000. Ingrid also incurred $10,000 of costs for painting and repairs, which were all completed and paid for two weeks prior to the sale of her home. Ingrid's basis in her old home was $180,000. Ingrid's realized gain upon the sale of her first home is

Which of the following statements regarding involuntary conversions is incorrect?

Eric exchanges a printing press with an adjusted basis of $64,000 for a smaller model with a $100,000 fair market value. In addition, he receives $20,000 of marketable securities. a. What is the amount of gain realized by Eric? b. What is the amount of gain recognized by Eric? c. What is Eric's basis in the new printing press? d. What is Eric's basis in the marketable securities?

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

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 automobile used in trade or business for office building used in trade or business

Frank, a single person age 52, sold his home this year. He had lived in the house for 10 years. He 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?

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

If each party in a like-kind exchange assumes a liability of the other party, only the net liability given or received is boot.

Alex owns an office building which the state condemns on January 15, 2015. Alex receives the condemnation award on April 1, 2015. In order to qualify for nonrecognition of gain on this involuntary conversion, what is the last date for Alex to acquire qualified replacement 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?

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.

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

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