Exam 12: Property Transactions: Nontaxable Exchanges

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

In a nontaxable exchange,Henri traded in a truck having an adjusted basis of $8,500 and a FMV of $10,000,for a new truck having a FMV of $15,000.In addition,Henri paid cash of $5,000.What is Henri's basis in the new truck?

Which of the following statements regarding involuntary conversions is incorrect?

In 1997,Paige paid $200,000 to purchase a new residence.She paid a realtor $5,000 to help locate the house and paid legal fees of $3,000 to make certain that the seller had legal title to the property.Under the provisions of tax law in effect at the time of the purchase,she deferred a gain of $30,000 from the sale of a former residence in 1996.In 1999,she added a new porch to the house at a cost of $15,000 and installed central air conditioning at a cost of $12,000.Since purchasing the house,she has paid $2,000 in repairs.What is the adjusted basis of the home?

Lana owned a house used as a rental property for three years.During this rental period,she took $60,000 of depreciation deductions.Lana moved into the house and has used it as her principal residence for the past two years.Lana has just sold the house and realized a $200,000 gain.She will recognize gain of

The receipt of boot as part of a nontaxable exchange causes a realized loss to be recognized.

Whitney exchanges timberland held as an investment for undeveloped land with a $300,000 FMV.Whitney's basis for the timberland is $150,000.She also transfers her tractor with a $15,000 basis and a $10,000 FMV as part of the exchange. a.What is the amount,if any,of gain or loss recognized on the transaction? b.What is the basis of the undeveloped land?

Jason owns a warehouse that is used in business.The FMV of the warehouse is $200,000 (basis $120,000),and the warehouse is subject to a mortgage of $40,000.Jason exchanges the warehouse for land valued at $150,000.The other party also pays him $10,000 cash and assumes the mortgage on the warehouse.Jason's basis in the land received will be

Ron's building,which was used in his business,was destroyed in a fire.Ron's adjusted basis in the building was $210,000,and its FMV was $330,000.Ron filed an insurance claim and was reimbursed $300,000.In that same year,Ron invested $240,000 of the insurance proceeds in another business building.Ron's basis in the new building is

Discuss the basis rules of property received in a nontaxable like-kind exchange.

Hannah,a single taxpayer,sold her primary residence on January 1,2016.Her total realized gain is $210,000.The house was acquired on January 1,2006 and rented to tenants until December 31,2012.Hannah moved in on January 1,2013 and used the house as her principal residence until the sale.During the rental period,$30,000 of depreciation was deducted.Due to the sale of the house in 2016,Hannah will recognize a gain of

Olivia exchanges land with a $50,000 basis plus marketable securities with a $20,000 basis for a larger parcel of land worth $110,000 in a transaction that otherwise qualifies as a like-kind exchange.The FMV of the land and marketable securities exchanged by Olivia is $75,000 and $35,000 respectively. a.What is the amount of gain realized and recognized by Olivia on each asset? b.What is the amount of Olivia's basis in the new land?

Landry exchanged land with an adjusted basis of $50,000 for another parcel of land worth $35,000 plus $10,000 of cash.Landry held the original land for investment purposes and will do the same with the new parcel.Due to the exchange,Landry will recognize

Dean exchanges business equipment with a $120,000 adjusted basis for $40,000 cash and business equipment with a $140,000 FMV.What is the amount of gain which Dean recognizes on the exchange?

Cassie owns a Rembrandt painting she acquired on June 1,2008 as an investment.She exchanges the painting on September 5,2016,for a Picasso painting and marketable securities to be held as an investment.On what date does the Picasso painting's holding period begin?

Glen owns a building that is used in business.The building is worth $200,000,but is subject to a mortgage of $40,000.Glen's basis in the building is $120,000.Glen exchanges the building for investment land worth $150,000 plus $10,000 cash.In addition,the other party assumes the mortgage which will be held for investment.Glen must recognize a gain of

Real property exchanged for personal property,both held for productive use in a business,qualifies as a like-kind exchange.

Kai owns an apartment building held for investment purposes.The apartment building is worth $500,000,although it is subject to a mortgage of $100,000.Kai's basis in the apartment building is $380,000.Kai exchanges the apartment building for an office building.The office building has an FMV of $350,000.Kai receives $50,000 cash in addition to receiving the office building,and the other party assumes the apartment building mortgage.What is Kai's recognized gain on this exchange?

If a gain is realized on the involuntary conversion of property,the gain may be deferred if qualifying replacement property is acquired within a specified time period at a cost equal to or greater than the amount realized on the involuntary conversion.

Juan's business delivery truck is destroyed in an accident.He paid $40,000 for the truck,and $30,000 of depreciation has been deducted during its period of use.The insurance company pays Juan $32,000 due to the accident.What is the minimum amount that Juan must spend on a new truck to avoid any gain recognition?