Exam 24: Property Transactions: Nontaxable Exchanges

Amelia exchanges an office building with a $350,000 adjusted basis for an airplane with a $560,000 fair market value to be used in business. a.What is the amount of gain or loss realized by Amelia? b.What is the amount of gain or loss recognized by Amelia?

The building used in Manuel's business was condemned by the city of Mobile.Manuel received a condemnation award of $220,000.He paid $800 in lawyer's fees and $600 for an appraisal of the property.Manuel's adjusted basis in the building was $120,000.Manuel reinvests in similar property costing $200,000,and Manuel makes the proper election regarding the property.Manuel's basis in the new building is

Discuss why a taxpayer would want to avoid like-kind exchange provisions.

If each party in a like-kind exchange assumes a liability of the other party,only the net liability given or received is boot.

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

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

Jenna,who is single,sold her principal residence on December 1,2014,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 1,2015 that she occupied until July 1,2015 when she receives a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2015 and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2015?

Cassie owns a Rembrandt painting she acquired on June 1,2008 as an investment.She exchanges the painting on September 5,2015,for a Picasso painting and marketable securities to be held as an investment.On what date does the Picasso painting's holding period begin?

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

An exchange of inventory for inventory of a like kind qualifies as a like-kind exchange.

Mick owns a racehorse with a $500,000 basis used for breeding purposes.The racehorse is killed in an accident and Mick receives $750,000 from the insurance company.Mick purchases another racehorse for $400,000. a.What is the amount of Mick's realized gain? b.What is the minimum amount of Mick's recognized gain,assuming the appropriate election is made?

The holding period of like-kind property received in a nontaxable exchange begins on the day of the exchange.

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

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

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.

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

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?

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

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

Emily owns land for investment purposes that has a FMV of $300,000 (basis of $260,000).She exchanges the land,plus $40,000 cash,for a warehouse to be used in her business.The warehouse is worth $420,000,but is subject to a mortgage of $80,000 which Emily will assume.The gain realized by Emily on the exchange is