Question 1

Which of the following statements is not true with regard to like-kind exchanges?

Accepted Answer

A) Nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
B) The holding period of like-kind property received includes the holding period of the property exchanged. 
C) A loss is always recognized if the taxpayer transfers non-like-kind personal use property (e.g.a personal use car)in an otherwise like-kind exchange. 
D) The basis of property received in an exchange is equal to the basis of the property exchanged less the boot received plus the gain recognized and less any loss recognized. 
A) Nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
B) The holding period of like-kind property received includes the holding period of the property exchanged. 
C) A loss is always recognized if the taxpayer transfers non-like-kind personal use property (e.g.a personal use car)in an otherwise like-kind exchange. 
D) The basis of property received in an exchange is equal to the basis of the property exchanged less the boot received plus the gain recognized and less any loss recognized.

Question 2

All of the following conditions would encourage a taxpayer to avoid like-kind exchange treatment on the disposition of an otherwise qualifying asset except

Accepted Answer

A) expected lower tax rates in the future. 
B) the availability of net operating loss carryovers. 
C) the disposition of a capital gain asset when the taxpayer has a capital loss carryover. 
D) a realized loss on the asset disposed of. 
A) expected lower tax rates in the future. 
B) the availability of net operating loss carryovers. 
C) the disposition of a capital gain asset when the taxpayer has a capital loss carryover. 
D) a realized loss on the asset disposed of.

Question 3

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements with respect to a like-kind exchange is false?

Accepted Answer

A) Property of one class must be exchanged for property of the same class. 
B) An exchange of inventory does not qualify as a like-kind exchange. 
C) Personal property must be exchanged for personal property. 
D) A sale of property and subsequent purchase of like-kind property will always qualify as a like-kind exchange. 
A) Property of one class must be exchanged for property of the same class. 
B) An exchange of inventory does not qualify as a like-kind exchange. 
C) Personal property must be exchanged for personal property. 
D) A sale of property and subsequent purchase of like-kind property will always qualify as a like-kind exchange.

Question 5

Marinda exchanges an office building worth $800,000 (basis is $820,000)for a warehouse worth $850,000.A part of the exchange she also transfers $50,000 worth of securities which she purchased for $40,000.
a.What are Marinda's realized and recognized gains (losses)on the two assets exchanged?
b.What is Marinda's basis in the warehouse acquired?

Accepted Answer

a.
 @#IMG-DLM& Loss cannot be recognized on like-k

Question 6

All of the following are true except:

Accepted Answer

A) A nonsimultaneous exchange may never qualify as a like-kind exchange. 
B) Nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
C) A loss may be recognized on non-like-kind property (boot)if the taxpayer transfers the boot in an otherwise like-kind exchange. 
D) The holding period of like-kind property received includes the holding period of the property exchanged. 
A) A nonsimultaneous exchange may never qualify as a like-kind exchange. 
B) Nonrecognition of gains and losses is mandatory if the exchange is a like-kind exchange. 
C) A loss may be recognized on non-like-kind property (boot)if the taxpayer transfers the boot in an otherwise like-kind exchange. 
D) The holding period of like-kind property received includes the holding period of the property exchanged.

Question 7

An office building owned by Abby and used in her business was destroyed in a fire.Abby's adjusted basis in the building was $145,000 and its FMV was $180,000.Abby filed an insurance claim and she was reimbursed $160,000.In that same year,Abby invested $150,000 of the insurance proceeds in another business building.
a.Assume Abby made the proper election with regard to the involuntary conversion.What is the amount of gain to be recognized by Abby?
b.What is Abby's basis in the new building?

Accepted Answer

The answer of An office building owned by Abby and...

Question 8

If property is involuntarily converted into similar property,the basis and holding period of the converted property carry over to the basis and holding period of the replacement property.

Accepted Answer

A) True 
 B)False

Question 9

Indicate with a "yes" or a "no" which of the following are like-kind exchanges (assume all assets are held for business or investment purposes).
a.Exchange of common stock held as an investment for land held as an investment.
b.Exchange of farmland for an apartment building.
c.Exchange of office furniture used in trade or business for computer used in a trade or business
d.Exchange of unimproved real estate for improved real estate.
e.Exchange of automobile used in trade or business for bulldozer used in trade or business

Accepted Answer

a.No;b.Yes

Question 10

The holding period for boot property received begins on the day after the date of the exchange.

Accepted Answer

A) True 
 B)False

Question 11

In order for the gain on the sale of a personal residence to be excluded under Section 121,a replacement residence must be purchased within two years.

Accepted Answer

A) True 
 B)False

Question 12

If related taxpayers exchange property qualifying for a like-kind exchange,the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

Accepted Answer

A) True 
 B)False

Question 13

Bob owns a warehouse that is used in business while Rebecca owns land.Bob exchanges the warehouse for the land,which will be held for investment.The FMV of the warehouse is $440,000 (basis $240,000),but the warehouse is subject to a mortgage of $80,000,which is assumed by Rebecca.Bob receives $40,000 cash and the land,which has a FMV of $320,000.Bob realizes a gain (loss)on the exchange of

Accepted Answer

A) $80,000. 
B) $120,000. 
C) $190,000. 
D) $200,000. 
A) $80,000. 
B) $120,000. 
C) $190,000. 
D) $200,000.

Question 14

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

Accepted Answer

A) True 
 B)False

Question 15

When the cost of replacement property is less than the amount realized on an involuntary conversion,gain will be recognized.The recognized gain will be equal to the amount realized over the cost of the replacement property,but not more than the total realized gain.

Accepted Answer

A) True 
 B)False

Question 16

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2016 for $950,000.They have lived in the home for 20 years.The basis of the home is $350,000.They purchased a new home for $1,000,000 in August 2016.After living in that home for 219 days,the Connors were forced to sell their new home in 2017 for $1,300,000 and move to another climate due to Ellen's severe health problems.
a.What is the amount of gain recognized on the home sale in 2016?
b.What is the amount of the gain recognized on the home sale in 2017?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& Amount excludable:

Question 17

A taxpayer sells her principal residence of five years and qualifies to exclude her full $100,000 gain.The taxpayer must report this excluded gain on her tax return for the year of sale.

Accepted Answer

A) True 
 B)False

Question 18

The $250,000/$500,000 exclusion for gain on the sale of a personal residence is only available to taxpayers who are age 55 or older.

Accepted Answer

A) True 
 B)False

Question 19

A sale of property and subsequent purchase of like-kind property may be treated as a like-kind exchange if the two transactions are interdependent.

Accepted Answer

A) True 
 B)False

Question 20

Ike and Tina married and moved into their new home (purchase price $800,000)18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

Accepted Answer

Under Section 121,if Ike and Tina own an

Which of the following statements is not true with regard to like-kind exchanges?

All of the following conditions would encourage a taxpayer to avoid like-kind exchange treatment on the disposition of an otherwise qualifying asset except

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Which of the following statements with respect to a like-kind exchange is false?

All of the following are true except:

If property is involuntarily converted into similar property,the basis and holding period of the converted property carry over to the basis and holding period of the replacement property.

The holding period for boot property received begins on the day after the date of the exchange.

In order for the gain on the sale of a personal residence to be excluded under Section 121,a replacement residence must be purchased within two years.

If related taxpayers exchange property qualifying for a like-kind exchange,the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

When the cost of replacement property is less than the amount realized on an involuntary conversion,gain will be recognized.The recognized gain will be equal to the amount realized over the cost of the replacement property,but not more than the total realized gain.

A taxpayer sells her principal residence of five years and qualifies to exclude her full $100,000 gain.The taxpayer must report this excluded gain on her tax return for the year of sale.

The $250,000/$500,000 exclusion for gain on the sale of a personal residence is only available to taxpayers who are age 55 or older.

A sale of property and subsequent purchase of like-kind property may be treated as a like-kind exchange if the two transactions are interdependent.

Ike and Tina married and moved into their new home (purchase price $800,000)18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 12: Property Transactions: Nontaxable Exchanges

Which of the following statements is not true with regard to like-kind exchanges?

All of the following conditions would encourage a taxpayer to avoid like-kind exchange treatment on the disposition of an otherwise qualifying asset except

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Which of the following statements with respect to a like-kind exchange is false?

All of the following are true except:

If property is involuntarily converted into similar property,the basis and holding period of the converted property carry over to the basis and holding period of the replacement property.

The holding period for boot property received begins on the day after the date of the exchange.

In order for the gain on the sale of a personal residence to be excluded under Section 121,a replacement residence must be purchased within two years.

If related taxpayers exchange property qualifying for a like-kind exchange,the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

The basis of non-like-kind property received is the basis in the hands of the transferor at the date of the exchange.

When the cost of replacement property is less than the amount realized on an involuntary conversion,gain will be recognized.The recognized gain will be equal to the amount realized over the cost of the replacement property,but not more than the total realized gain.

A taxpayer sells her principal residence of five years and qualifies to exclude her full $100,000 gain.The taxpayer must report this excluded gain on her tax return for the year of sale.

The $250,000/$500,000 exclusion for gain on the sale of a personal residence is only available to taxpayers who are age 55 or older.

A sale of property and subsequent purchase of like-kind property may be treated as a like-kind exchange if the two transactions are interdependent.

Ike and Tina married and moved into their new home (purchase price $800,000)18 months ago.They are thinking of selling the home which is now worth $1,300,000.They plan to reinvest in a smaller home costing approximately $600,000.What should they consider before selling their home?

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters