Exam 8: Tax-Deferred Exchanges

Both gain and loss are deferred in a like-kind exchange.

A transfers machines valued at $170,000 (basis = $150,000)along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000)to the corporation.A receives 40 percent of the outstanding stock and B receives 60 percent.B also receives $20,000 from the corporation.What is AB Corporation's basis for the machines?

In what year is a theft loss reported for tax purposes?

Which type of reorganization does not entail a transfer of assets for stock?

Wally's investment real estate was condemned on November 14,2015.On February 14,2016,he received $250,000 for the property that had a basis of $210,000.What is the last date that Wally can acquire replacement property to avoid gain recognition?

How long does a taxpayer have to replace real property that has been condemned?

In a qualified reorganization:

By what mechanism is a deferral of gain normally accomplished?

Which type of reorganization does not allow the parent corporation to make a qualifying transfer to a subsidiary of the property received in the reorganization?

What effect does the assumption of liabilities by the corporation normally have on gain or loss recognition and stock basis determination by a transferring shareholder in a Section 351 transfer?

David owns 600 shares of K Corporation stock when K is merged into Parent Corporation.David receives 500 shares of Parent Corporation stock (fair market value = $10,500)and $500 cash in exchange for his K Corporation stock.David's K stock had a basis of $8,000 and an $11,000 fair market value.What is David's realized and recognized gain,respectively?

What is the difference between a carryover basis and a substituted basis?

Which of the following is not a divisive reorganization?

A tax-deferred reorganization can involve all of the following except:

What is a wash sale?

Juan owned a small rental property,which was condemned by the county to expand a local park.His adjusted basis in the property was $40,000 and he received a payment of $75,000 from the county.A year later he purchased a similar piece of real estate for $70,000.What is Juan's basis in the replacement property?

A transfers machines valued at $170,000 (basis = $150,000)along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000)to the corporation.A receives 40 percent of the outstanding stock and B receives 60 percent.B also receives $20,000 from the corporation.What is AB Corporation's basis for the real property?

Simon purchased 1,000 shares of ABC stock for $8,000 on April 4.On March 1 he had sold 1,500 shares of ABC stock for $9,000 that he had purchased three months earlier for $15,000.What is Simon's realized and recognized loss,respectively,on the March 1 stock sale?

Sid's home was destroyed by fire.He had purchased the home 18 months ago for $950,000.He received $1,300,000 from his insurance company to replace the home.If he fails to rebuild the home or acquire a replacement home in the required time,how much gain must he recognize on this conversion?

The holding period for property received in a qualifying like-kind exchange begins on the date the new property is received.