Exam 12: Property Transactions: Nontaxable Exchanges

Pierce,a single person age 60,sold his home this year.He had lived in the house for 10 years.He signed a contract on March 4 to sell his home. Based on these facts,what is the amount of his recognized gain?

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 will recognize gain of

Bob and Elizabeth,both 55 years old and married,sell their personal residence to Wolfgang.Wolfgang pays $660,000 and assumes their $90,000 mortgage.To make the sale they pay $20,000 in commissions and $10,000 in legal costs.They have owned and lived in the house for seven years and their tax basis is $200,000.What is the amount of gain recognized on the sale?

William and Kate married in 2016 and purchased a new home together.Each had owned and lived in separate residences for the past 5 years.William's adjusted basis in his old residence was $200,000;Kate's adjusted basis in her old residence was $120,000.In late 2016,William sells his residence for $500,000 while Kate sells her residence for $190,000.What is the total gain to be excluded from these transactions in 2016?

Alex,a commercial fisherman,owns a fishing boat with a $1,600,000 basis.The boat is destroyed in a hurricane,and Alex collects $2,000,000 from the insurance company.He purchases another boat for $1,550,000.What is the amount of the gain recognized on the transaction?

In the case of married taxpayers,an individual may claim the Sec.121 exclusion even if the individual's spouse used the exclusion within the past two years.

Trent,who is in the business of racing horses,exchanges a racehorse with a basis of $80,000 for $40,000 cash and a trotter (another racehorse)with a $150,000 fair market value. a.What is the amount of gain realized by Trent? b.What is the amount of gain recognized by Trent? c.What is the adjusted basis of the trotter?

Each of the following is true of deferral of gain attributable to the involuntary conversion of personal property with the exception of

If an exchange qualifies as a like-kind exchange,nonrecognition of gain or loss is elective.

The exchange of antiques held for investment purposes for stock in an antiques auction house held as an investment qualifies for like-kind treatment.

A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion.

All of the following qualify as a like-kind exchange except

Laurie owns land held for investment.The land's FMV is $150,000.Laurie's basis in the land is $130,000.Laurie exchanges the land,plus $20,000 of cash,for a warehouse owned by Trey.The warehouse is worth $210,000,but is subject to a mortgage of $40,000 which Laurie will assume.Trey's basis in the warehouse is $120,000.Laurie's basis in the warehouse received will be

A loss on the sale of a taxpayer's personal residence is deductible if the taxpayer owned and lived in the home for two of five years.

Yael exchanges an office building worth $150,000 for investment land worth $175,000.He also provided stock worth $25,000.Yael's adjusted basis in the building and stock is $180,000 and $11,000,respectively.How much gain or loss will Yael recognize on the exchange?

The involuntary conversion provisions which allow deferral of gain are mandatory.

Jenna,who is single,sold her principal residence on December 1,2015,and excluded the $150,000 gain because she met the ownership and usage requirements under Sec.121.Jenna purchased another residence in Pensacola on January 1,2016 that she occupied until July 1,2016 when she receives a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2016 and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2016?

Ron and Fay live in Buffalo.They also own a condominium in Orlando (purchased in 2011)which they rent to vacationers.Ron and Fay will be retiring.They plan to live in the Orlando property for two and a half years.When they sell it,they will be able to exclude the full gain which is expected to be about $200,000.

According to Sec.121,individuals who sell or exchange their personal residence may exclude part or all of the gain if the house was owned and occupied as a principal residence for

The Smiths owned and occupied their principal residence,with an adjusted basis of $250,000,for ten years.The house is destroyed by a tornado and the Smiths receive insurance proceeds of $800,000.Six months later,they purchase another residence for $850,000. a.What is the amount of gain the Smiths must recognize? b.What is the basis of the new residence?