Question 1

What are the time limits imposed on a nonsimultaneous exchange to qualify as like kind?

Accepted Answer

The taxpayer has 45 days from the date t

Question 2

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

Accepted Answer

A)  0 
B)  $4,000 
C)  $10,000 
D)  $20,000 
A)  0 
B)  $4,000 
C)  $10,000 
D)  $20,000

Question 3

Lucas transfers investment land to a corporation as part of a Section 351 transaction. The land has a fair market value of $75,000, an adjusted basis of $30,000, and is encumbered by a mortgage (from its original purchase five years ago by Lucas) of $40,000 that the corporation assumes. In exchange for the land, the corporation issues stock to Lucas worth $35,000. How much gain does Lucas recognize, what is Lucas's stock basis, and what is the basis of the land to the corporation, respectively?

Accepted Answer

A)  $0 gain; $30,000 stock basis; $30,000 land basis 
B)  $10,000 gain; $0 stock basis; $40,000 land basis 
C)  $10,000 gain; $10,000 stock basis; $30,000 land basis 
D)  $0 gain; $0 stock basis; $30,000 land basis 
A)  $0 gain; $30,000 stock basis; $30,000 land basis 
B)  $10,000 gain; $0 stock basis; $40,000 land basis 
C)  $10,000 gain; $10,000 stock basis; $30,000 land basis 
D)  $0 gain; $0 stock basis; $30,000 land basis

Question 4

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 B's basis for his AB stock?

Accepted Answer

A)  $340,000 
B) $320,000 
C)  $310,000 
D)  $300,000 
A)  $340,000 
B) $320,000 
C)  $310,000 
D)  $300,000

Question 5

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?

Accepted Answer

A)  $350,000 
B)  $162,500 
C)  $100,000 
D)  $0 
A)  $350,000 
B)  $162,500 
C)  $100,000 
D)  $0

Question 6

The taxpayer-use test for qualifying replacement property

Accepted Answer

A)  applies only to personalty 
B)  requires replacement property used by the taxpayer to be used in the same business as the converted property 
C)  only requires leased realty to be replaced with other leased realty 
D)  Is more restrictive than the functional-use test 
A)  applies only to personalty 
B)  requires replacement property used by the taxpayer to be used in the same business as the converted property 
C)  only requires leased realty to be replaced with other leased realty 
D)  Is more restrictive than the functional-use test

Question 7

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

Accepted Answer

A theft loss is repo

Question 8

How is a new partner's basis in a partnership interest determined if the partnership has no liabilities?

Accepted Answer

The basis of an entering partn

Question 9

On November 4, 2017, Tom purchased 2,000 shares of DDD stock for $20,000. On June 2, 2018, Tom sold the 2,000 shares for $14,000. On June 30, 2018, he purchased 1,000 shares of DDD stock for $5,000. What is Tom's realized and recognized gain or loss on the June 2, 2018 sale and his basis in the stock from the June 30 purchase?

Accepted Answer

This is a wash sale for 1,000 of the 2,0

Question 10

The Bogtown Corporation owns a 20-year old factory building that it wants to exchange for land to build a new factory. The building has a fair market value of $2,200,000 and has a basis of $800,000. Dundee Corporation is willing to exchange some land it has held for expansion for the building.

Accepted Answer

A)  If the land has a fair market value of $2,200,000, what is Bogtown's realized and recognized gain and its basis in the land? 
B)  How would your answers to (a) change if Dundee's land is only valued at $1,900,000 and it gives Bogtown $300,000 cash on the exchange? 
C)  How would your answers to (a) change if the land is valued at $3,000,000 and Bogtown assumes an $800,000 mortgage on the land? 
A)  If the land has a fair market value of $2,200,000, what is Bogtown's realized and recognized gain and its basis in the land? 
B)  How would your answers to (a) change if Dundee's land is only valued at $1,900,000 and it gives Bogtown $300,000 cash on the exchange? 
C)  How would your answers to (a) change if the land is valued at $3,000,000 and Bogtown assumes an $800,000 mortgage on the land?

Question 11

A business airplane exchanged for a fleet of trucks, all used for the delivery of manufactured goods, is a qualifying like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 12

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Accepted Answer

A)  ($50,000), ($50,000) 
B)  ($50,000), 0 
C)  $50,000, $50,000 
D)  0, 0 
A)  ($50,000), ($50,000) 
B)  ($50,000), 0 
C)  $50,000, $50,000 
D)  0, 0

Question 13

Four shareholders form a new corporation in exchange for stock with a fair market value of $1,000 per share. Benjamin transfers investment land (current fair market value of $35,000) that he purchased 10 year ago for $15,000. In exchange, Benjamin receives 30 shares of stock and $5,000 cash. Andrew transfers a machine with a basis of $45,000 and a fair market value of $35,000. Andrew receives 30 shares of stock and $5,000 cash. Emily transfers a rental office building (current fair market value of $45,000) that she purchased 20 years ago for $60,000. Its current basis is $15,000 after recognition of $45,000 in depreciation expense. The corporation assumes the $20,000 balance on the original mortgage and Emily receives 25 shares of stock from the corporation in the exchange. Jackson provided the legal services to organize the corporation (value $5,000) and contributes $10,000 in cash in exchange for 15 shares of stock. How much income or gain does Jackson recognize?

Accepted Answer

A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000 
A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000

Question 14

Which type of reorganization is a recapitalization?

Accepted Answer

A)  Type B 
B)  Divisive Type D 
C)  Type C 
D)  Type E 
A)  Type B 
B)  Divisive Type D 
C)  Type C 
D)  Type E

Question 15

Four shareholders form a new corporation in exchange for stock with a fair market value of $1,000 per share. Benjamin transfers investment land (current fair market value of $35,000) that he purchased 10 year ago for $15,000. In exchange, Benjamin receives 30 shares of stock and $5,000 cash. Andrew transfers a machine with a basis of $45,000 and a fair market value of $35,000. Andrew receives 30 shares of stock and $5,000 cash. Emily transfers a rental office building (current fair market value of $45,000) that she purchased 20 years ago for $60,000. Its current basis is $15,000 after recognition of $45,000 in depreciation expense. The corporation assumes the $20,000 balance on the original mortgage and Emily receives 25 shares of stock from the corporation in the exchange. Jackson provided the legal services to organize the corporation (value $5,000) and contributes $10,000 in cash in exchange for 15 shares of stock. What is Jackson's basis in the stock he received?

Accepted Answer

A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000 
A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000

Question 16

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

Accepted Answer

The taxpayer has three years f

Question 17

When is gain recognized in a like-kind exchange?

Accepted Answer

Gain is recognized on a like-k

Question 18

Cal exchanges an apartment building (including land) with an adjusted basis of $55,000 (and fair market value of $90,000) for a piece of undeveloped land valued at $80,000 and $10,000 cash. As a result of the exchange, Carl paid $14,000 of fees. What is Carl's recognized gain on the exchange?

Accepted Answer

A)  0 
B)  $10,000 
C)  $35,000 
D)  $21,000 
A)  0 
B)  $10,000 
C)  $35,000 
D)  $21,000

Question 19

Georgia's home was damaged by flood. Its fair market value before and after the flood are $125,000 and $75,000, respectively. Its adjusted basis was $90,000. Georgia received $50,000 from her insurance company and she was able to have the house repaired for $40,000. What is the amount of Georgia's basis in the house after the repairs?

Accepted Answer

A)  $ 40,000 
B)  $ 80,000 
C)  $ 90,000 
D)  $125,000 
A)  $ 40,000 
B)  $ 80,000 
C)  $ 90,000 
D)  $125,000

Question 20

Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Accepted Answer

A) True 
 B)False

What are the time limits imposed on a nonsimultaneous exchange to qualify as like kind?

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

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 taxpayer-use test for qualifying replacement property

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

How is a new partner's basis in a partnership interest determined if the partnership has no liabilities?

The Bogtown Corporation owns a 20-year old factory building that it wants to exchange for land to build a new factory. The building has a fair market value of $2,200,000 and has a basis of $800,000. Dundee Corporation is willing to exchange some land it has held for expansion for the building.

A business airplane exchanged for a fleet of trucks, all used for the delivery of manufactured goods, is a qualifying like-kind exchange.

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Which type of reorganization is a recapitalization?

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

When is gain recognized in a like-kind exchange?

Cal exchanges an apartment building (including land) with an adjusted basis of $55,000 (and fair market value of $90,000) for a piece of undeveloped land valued at $80,000 and $10,000 cash. As a result of the exchange, Carl paid $14,000 of fees. What is Carl's recognized gain on the exchange?

Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 9: Tax-Deferred Exchanges

What are the time limits imposed on a nonsimultaneous exchange to qualify as like kind?

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

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 taxpayer-use test for qualifying replacement property

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

How is a new partner's basis in a partnership interest determined if the partnership has no liabilities?

The Bogtown Corporation owns a 20-year old factory building that it wants to exchange for land to build a new factory. The building has a fair market value of $2,200,000 and has a basis of $800,000. Dundee Corporation is willing to exchange some land it has held for expansion for the building.

A business airplane exchanged for a fleet of trucks, all used for the delivery of manufactured goods, is a qualifying like-kind exchange.

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Which type of reorganization is a recapitalization?

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

When is gain recognized in a like-kind exchange?

Cal exchanges an apartment building (including land) with an adjusted basis of $55,000 (and fair market value of $90,000) for a piece of undeveloped land valued at $80,000 and $10,000 cash. As a result of the exchange, Carl paid $14,000 of fees. What is Carl's recognized gain on the exchange?

Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters