Exam 8: Tax-Deferred Exchanges

_____ 6.For a nonsimultaneous exchange to qualify for like-kind provisions,the taxpayer must identify the property to be acquired within 90 days and actually close the transactions within 180 days.

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?

_____ 16.Internal Revenue Code Section 351,relating to transfers to a controlled corporation,can apply to transfers to both a new and an existing corporation.

Zandu Corporation exchanged a building (fair market value = $1,000,000,adjusted basis = $700,000)and two semi-tractor-trailers (fair market value = $300,000;adjusted basis = $225,000),all five years old,for land to build a new facility valued at $1,300,000.What is Zandu's realized and recognized gain and its basis in the land? Realized gain Recognized gain Basis of land

Cal exchanges office furniture (fair market value = $100,000;adjusted basis = $90,000)and a business auto (fair market value = $10,000;adjusted basis = $6,000)for fire retardant filing cabinets (fair market value = $110,000;adjusted basis = $80,000).How much gain or loss does Cal recognize on the exchange?

_____ 14.If a taxpayer's personal residence is involuntarily converted,the taxpayer can only defer gain by acquiring a new residence in the required time period using Internal Revenue Code Section 1033.

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?

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?

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?

_____ 15.A taxpayer must transfer a sufficient amount of property,along with any services performed for the stock received in a corporate formation,for the stock received in the exchange to be used to meet the control requirement.

_____ 3.A business airplane exchanged for a fleet of trucks,all used for the delivery of manufactured goods,is a qualifying like-kind exchange.

_____ 17.Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Which of the following characteristics is the same for transfers of property to both a corporation and to a partnership in exchange solely for an ownership interest?

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 A's basis for his AB stock?

The taxpayer-use test for qualifying replacement property