Exam 27: Property Transactions: Nontaxable Exchanges

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

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?

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

Sometimes taxpayers should structure a transaction to avoid the application of like-kind provisions. Which of the following conditions is likely to cause a taxpayer to avoid like-kind treatment?

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?

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 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?

Replacing a building with land qualifies as replacement property under the involuntary conversion rules relevant to a casualty.

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

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

Bobbie exchanges business equipment (adjusted basis $160,000) for other business equipment that has a FMV of $140,000. Bobbie also receives $30,000 cash. Bobbie's basis in the new equipment is

Nana is a self-employed consultant. For the past five years, she has used an extra bedroom (15% of the house) in her home as a qualifying home office and deducted $9,000 of depreciation expense. This year she sells the house for $740,000. The house cost $500,000. Nana is single. She will recognize gain on the sale of the house of

Stephanie's building, which was used in her business, was destroyed in a fire. Stephanie's adjusted basis in the building was $175,000, and its FMV was $210,000. Stephanie filed an insurance claim and was reimbursed $200,000. In that same year, Stephanie invested $180,000 of the insurance proceeds in another business building. Assuming the proper election is made to defer gain, Stephanie's basis in the new building 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.

Generally, a full exclusion of gain under Sec. 121 upon the sale of a personal residence applies to only one sale or exchange every

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?

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

The taxpayer must be occupying the residence at the time of the sale in order for Sec. 121 to apply.

An investor exchanges an office building located in Niagara Falls, NY for an office building located in Niagara Falls, Ontario. The exchange does not qualify as like-kind.