Exam 8: Tax-Deferred Exchanges

What is the amount of the casualty loss on a business truck that had a fair market value of $14,000 before an accident and $4,000 after an accident,if its adjusted basis is zero?

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?

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?

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 are A's and B's recognized gains or losses,respectively,on these transfers?

Willow Corporation exchanged land valued at $250,000 (adjusted basis = $175,000)for a building owned by Tree Corporation valued at $350,000 (adjusted basis = $200,000)and $50,000 cash.In addition,Willow assumed the $150,000 mortgage on Tree's building.What are Willow and Tree's realized gains or losses on the properties exchanged,respectively?

_____ 10.The loss on the total destruction of business property is always its adjusted basis regardless of fair market value.

Which of the following is not a required characteristic of a qualifying Section 351 transaction?

Refer to the information in the preceding question.What are James's and Pete's recognized gains on the exchange,respectively?

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?

How much does a taxpayer in the 33 percent tax bracket save by deferring a $1,000,000 gain for 3 years using a 6 percent discount rate for evaluation?

In 2013,Larry's car,which he purchased six years ago for $6,000,was demolished in a traffic accident.As a result of the delay caused by this accident,Larry missed a business meeting and lost out on an important sale on which he could have earned a $1,200 commission.When he arrived home,he found his house had been broken into and his personal video equipment currently worth $3,200 (original cost = $5,000)had been stolen,along with his baseball card collection valued at $2,000 (basis = $1,500).Larry's homeowner's policy covered only $3,000 of this theft loss.He had dropped the collision coverage on his auto insurance policy because that portion was too expensive,so he had no insurance coverage for his auto accident.His adjusted gross income is $82,000 and the fair market value of the car at the time of the accident was $8,000.How much can Larry deduct as an itemized deduction for his casualty and theft losses?

_____ 13.To defer gain recognition on an involuntary conversion,qualifying property must be obtained within a specified time period.

In a qualified reorganization:

Twining Corporation has some land it wants to trade for a building owned by Clopp Corporation.Clopp does not want to exchange the building because it wants to recognize its loss on the building.Twining,however,does not want to recognize its gain.What alternative(s)does Twining have?

Sophie received a 30 percent interest in a general partnership in exchange for property valued at $35,000 (adjusted basis = $25,000)and services valued at $5,000.In addition,the partnership assumed a $10,000 liability on the property.What is Sophie's basis in her partnership interest?

Trudi Corporation has a building that it needs to sell or exchange because of growth in its business.If Trudi sells the building,it will have a gain of $450,000.What is the amount of taxes that Trudi will avoid paying if it can exchange the building? The corporation has $1,000,000 of taxable income from operations for the current year.

James corporation exchanges a building (fair market value = $800,000,adjusted basis = $600,000)that has a $100,000 mortgage for another building owned by Pete Corporation (fair market value = $1,100,000,adjusted basis = $600,000)that is encumbered by a $400,000 mortgage.Each party assumed the mortgage on the building received.What are James's and Pete's realized gains on this exchange,respectively?

_____ 8.Both gain and loss are deferred in a wash sale.

Elizabeth exchanges her retail storage assets for retail displays.In this like-kind exchange,Elizabeth receives $2,000 in cash.The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000.The displays have a fair market value of $10,000 and a basis of $8,000.What is Elizabeth's realized gain on the exchange?

_____ 12.A theft loss of $10,000 cash by an individual results in a $10,000 casualty loss deduction.