Question 1

_____ 2.Boot received in a like-kind exchange never causes loss to be recognized.

Accepted Answer

A) True 
 B)False

Question 2

_____ 4.The holding period for boot in a like-kind exchange begins on the date of the exchange.

Accepted Answer

A) True 
 B)False

Question 3

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?

Accepted Answer

A) $3,000 and $3,000 
B)  $3,000 and $2,500 
C) $2,500 and zero 
D) $2,500 and $500 
E) $3,000 and $500 
A) $3,000 and $3,000 
B)  $3,000 and $2,500 
C) $2,500 and zero 
D) $2,500 and $500 
E) $3,000 and $500

Question 4

Refer to the information in the preceding question.What are Willow's and Tree's recognized gain or loss,respectively?

Accepted Answer

A) 0,0 
B) $50,000,$100,000 
C) $50,000,$150,000 
D) $75,000,$150,000 
E) None of the above 
A) 0,0 
B) $50,000,$100,000 
C) $50,000,$150,000 
D) $75,000,$150,000 
E) None of the above

Question 5

Which of the following would not be considered an involuntary conversion?

Accepted Answer

A) The theft of jewelry 
B) Sale of property in a flood zone 
C) Condemnation of a building for a highway 
D) Destruction of a home by a tornado 
E) All are involuntary conversions 
A) The theft of jewelry 
B) Sale of property in a flood zone 
C) Condemnation of a building for a highway 
D) Destruction of a home by a tornado 
E) All are involuntary conversions

Question 6

Wally's investment real estate was condemned on November 14,2013.On February 14,2014,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?

Accepted Answer

A) November 14,2016 
B) February 14,2017 
C) December 31,2016 
D) December 31,2017 
E) None of the above 
A) November 14,2016 
B) February 14,2017 
C) December 31,2016 
D) December 31,2017 
E) None of the above

Question 7

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 
E) None of the above 
A) ($50,000), ($50,000) 
B) ($50,000),0 
C) $50,000,$50,000 
D) 0,0 
E) None of the above

Question 8

_____ 5.Both gain and loss are deferred in a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 9

In early 2013,Conrad Corporation discovered their bookkeeper had embezzled $30,000 over the last three years at a rate of approximately $10,000 per year.Conrad also suffered uninsured hurricane damage of $40,000 late in 2013 in a presidentially declared disaster are a.If Conrad wants to deduct its losses at the earliest time possible,what are the amounts (before any limitations)and year(s)of its loss deduction?

Accepted Answer

A) 2013 = $70,000 
B) 2012 = $30,000,2012 = $40,000 
C) 2012 = $40,000,2013 = $30,000 
D) 2011 = $10,000,2012 = $10,000;2013 = $50,000 
E) None of the above 
A) 2013 = $70,000 
B) 2012 = $30,000,2012 = $40,000 
C) 2012 = $40,000,2013 = $30,000 
D) 2011 = $10,000,2012 = $10,000;2013 = $50,000 
E) None of the above

Question 10

_____ 1.The holding period for property received in a qualifying like-kind exchange begins on the date the new property is received.

Accepted Answer

A) True 
 B)False

Question 11

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 recognized gain on the exchange?

Accepted Answer

A) zero 
B) $2,000 
C) $6,000 
D) $9,000 
A) zero 
B) $2,000 
C) $6,000 
D) $9,000

Question 12

_____ 7.The taxpayer-use test for deferral of gain on an involuntary conversion requires the taxpayer to acquire property that has the same function as the involuntarily converted property that he or she used prior to the conversion.

Accepted Answer

A) True 
 B)False

Question 13

All of the following are deferral provisions except:

Accepted Answer

A) Sale of a personal residence 
B) Like-kind exchange 
C) Exchange of a life insurance contract for an annuity contract 
D) Property transfers pursuant to divorce proceedings 
E) All are deferral provisions 
A) Sale of a personal residence 
B) Like-kind exchange 
C) Exchange of a life insurance contract for an annuity contract 
D) Property transfers pursuant to divorce proceedings 
E) All are deferral provisions

Question 14

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 basis in the displays received in the exchange?

Accepted Answer

A) $9,000 
B) $6,000 
C) $3,000 
D) zero 
A) $9,000 
B) $6,000 
C) $3,000 
D) zero

Question 15

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 recognized gain on the involuntary conversion of his rental property?

Accepted Answer

A) 0 
B) $5,000 
C) $10,000 
D) $30,000 
E) $35,000 
A) 0 
B) $5,000 
C) $10,000 
D) $30,000 
E) $35,000

Question 16

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?

Accepted Answer

A) $150,000 
B)  $160,000 
C) $170,000 
D) $180,000 
E) None of the above 
A) $150,000 
B)  $160,000 
C) $170,000 
D) $180,000 
E) None of the above

Question 17

_____ 9.A condemnation is one type of involuntary conversion.

Accepted Answer

A) True 
 B)False

Question 18

Bertam transfers property with a $50,000 mortgage,a fair market value of $350,000,and a basis of $200,000 for stock valued at $300,000.If the corporation assumes the mortgage,what is Bertram's basis in the stock received in this qualifying Section 351 transaction?

Accepted Answer

A) $200,000 
B) $250,000 
C) $300,000 
D) $350,000 
E) None of the above 
A) $200,000 
B) $250,000 
C) $300,000 
D) $350,000 
E) None of the above

Question 19

Which of the following is not a characteristic of involuntary conversions?

Accepted Answer

A) Gain only is deferred 
B) The taxpayer can receive cash to invest in qualifying replacement property 
C) The provision applies to both realty and personalty 
D) All of these are characteristics 
E) None of these are characteristics 
A) Gain only is deferred 
B) The taxpayer can receive cash to invest in qualifying replacement property 
C) The provision applies to both realty and personalty 
D) All of these are characteristics 
E) None of these are characteristics

Question 20

Which of the following is not a characteristic of a like-kind exchange?

Accepted Answer

A) The holding period for like-kind property includes the holding period of the property surrendered. 
B) Receipt of boot can cause gain recognition up to the gain realized. 
C) Business realty can be exchanged for business personalty. 
D) Personal-use assets do not qualify for like-kind exchanges. 
E) All are like-kind characteristics. 
A) The holding period for like-kind property includes the holding period of the property surrendered. 
B) Receipt of boot can cause gain recognition up to the gain realized. 
C) Business realty can be exchanged for business personalty. 
D) Personal-use assets do not qualify for like-kind exchanges. 
E) All are like-kind characteristics.

_____ 2.Boot received in a like-kind exchange never causes loss to be recognized.

_____ 4.The holding period for boot in a like-kind exchange begins on the date of the exchange.

Refer to the information in the preceding question.What are Willow's and Tree's recognized gain or loss,respectively?

Which of the following would not be considered an involuntary conversion?

Wally's investment real estate was condemned on November 14,2013.On February 14,2014,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?

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?

_____ 5.Both gain and loss are deferred in a like-kind exchange.

_____ 1.The holding period for property received in a qualifying like-kind exchange begins on the date the new property is received.

_____ 7.The taxpayer-use test for deferral of gain on an involuntary conversion requires the taxpayer to acquire property that has the same function as the involuntarily converted property that he or she used prior to the conversion.

All of the following are deferral provisions except:

_____ 9.A condemnation is one type of involuntary conversion.

Bertam transfers property with a $50,000 mortgage,a fair market value of $350,000,and a basis of $200,000 for stock valued at $300,000.If the corporation assumes the mortgage,what is Bertram's basis in the stock received in this qualifying Section 351 transaction?

Which of the following is not a characteristic of involuntary conversions?

Which of the following is not a characteristic of a like-kind exchange?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters

Exam 8: Tax-Deferred Exchanges

_____ 2.Boot received in a like-kind exchange never causes loss to be recognized.

_____ 4.The holding period for boot in a like-kind exchange begins on the date of the exchange.

Refer to the information in the preceding question.What are Willow's and Tree's recognized gain or loss,respectively?

Which of the following would not be considered an involuntary conversion?

Wally's investment real estate was condemned on November 14,2013.On February 14,2014,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?

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?

_____ 5.Both gain and loss are deferred in a like-kind exchange.

_____ 1.The holding period for property received in a qualifying like-kind exchange begins on the date the new property is received.

_____ 7.The taxpayer-use test for deferral of gain on an involuntary conversion requires the taxpayer to acquire property that has the same function as the involuntarily converted property that he or she used prior to the conversion.

All of the following are deferral provisions except:

_____ 9.A condemnation is one type of involuntary conversion.

Bertam transfers property with a $50,000 mortgage,a fair market value of $350,000,and a basis of $200,000 for stock valued at $300,000.If the corporation assumes the mortgage,what is Bertram's basis in the stock received in this qualifying Section 351 transaction?

Which of the following is not a characteristic of involuntary conversions?

Which of the following is not a characteristic of a like-kind exchange?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters