Question 1

A gain on a like-kind exchange is always recognized to the extent of any boot received.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is/are correct concerning a principal residence?
I.A principal residence can be a house,condominium,mobile home,or houseboat.
II.A taxpayer can have more than one principal residence at a time.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 3

Sarah exchanges investment real estate with Russell.Sarah's adjusted basis in her two-year old property is $280,000.The property is encumbered by a mortgage of $100,000 and has a fair market value of $320,000 when exchanged.Russell assumes that debt.Russell paid $80,000 cash for his property in 1999 and it is appraised at $150,000 on the day of the exchange.Russell pays Sarah enough in cash to balance the exchange.What is Russell's basis in the new land?

Accepted Answer

A) $ 80,000 
B) $180,000 
C) $250,000 
D) $320,000 
E) None of the above 
A) $ 80,000 
B) $180,000 
C) $250,000 
D) $320,000 
E) None of the above

Question 4

Justin trades an office building located in Michigan to John for an apartment complex located in North Carolina.Details of the two properties:
$\begin{array}{lrr}
&\text { Justin } & \text { John } \
&\text { Michigan } & \text { N. Carolina }\
\text { Fair market value } & \$ 9,000,000 & \$ 4,000,000 \
\text { Adjusted basis } & 3,000,000 & 3,000,000 \
\text { Liabilities transferred with property } & 2,000,000 & -0 \text { - }
\end{array}$
In addition,John pays Justin $3,000,000 cash as part of this transaction.What is the gain (loss)recognized by John in this transaction and what is his basis in the Michigan property?
$\begin{array}{lc}
\text { Gain Recognized } & \text { Adjusted B asis } \
\text { a. } \$ 1,000,000 & \$ 9,000,000 \
\text { b. } \$-0- & \$ 8,000,000 \
\text { c. } \$ 1,000,000 & \$ 6,000,000 \
\text { d. } \$-20- & \$ 9,000,000
\end{array}$
$\text { e. Some other amounts }$

Accepted Answer

The answer of Justin trades an office building located in...

Question 5

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.What is his basis in the new real estate?

Accepted Answer

A) $160,000 
B) $170,000 
C) $180,000 
D) $200,000 
E) $210,000 
A) $160,000 
B) $170,000 
C) $180,000 
D) $200,000 
E) $210,000

Question 6

Match each statement with the correct term below.
-Principal residence

Accepted Answer

A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies. 
A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 7

Iris' personal residence,located in a plush suburban area,is condemned to facilitate the construction of a new freeway artery.Iris receives a condemnation award of $1,000,000.She uses the award to purchase a new residence for $1,150,000.The adjusted basis of the former residence was $1,100,000 at the date of the condemnation.Determine Iris's recognized gain or loss and the basis in the new residence.Discuss in terms of the concepts of taxation how you arrived at your answers.

Accepted Answer

Iris' realized loss of $100,000 ($1,000,

Question 8

For a transaction to qualify as a third-party exchange,
I.The exchange must be completed within 1 year of the first exchange.
II.The property exchanged must be identified within 45 days of the first exchange.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 9

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Accepted Answer

A) $ - 0 - 
B) $425,000 
C) $400,000 
D) $200,000 
E) $175,000 
A) $ - 0 - 
B) $425,000 
C) $400,000 
D) $200,000 
E) $175,000

Question 10

Karen owns a commercial office building with a fair market value of $140,000.She purchased the building as an investment for $102,000 in 2003.She has claimed $18,000 in depreciation deductions.Karen trades the building for an apartment complex.The apartment complex has a value of $140,000,and the exchange qualifies for like-kind deferral treatment.What is Karen's basis in the apartment complex?

Accepted Answer

A) $ - 0 - 
B) $ 58,000 
C) $ 84,000 
D) $140,000 
E) $198,000 
A) $ - 0 - 
B) $ 58,000 
C) $ 84,000 
D) $140,000 
E) $198,000

Question 11

Which of the following qualify as a like-kind exchange?
-Land held as an investment for land used in a business.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 12

Which of the following qualify as a like-kind exchange?
-Land in London,England for land in San Francisco,California.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 13

Matthew exchanges an investment apartment building for a parcel of land.The apartment building has a fair market value of $80,000 and an adjusted basis of $95,000.The land's value is $60,000.Matthew receives $20,000 cash in the exchange.What is Matthew's recognized gain or (loss)on the exchange and his basis in the land?
$\begin{array}{lr}
\text { Gain (Loss) Recognized } & \text { Basis } \
\text { a. } \$-0- & \$ 75,000 \
\text { b. } \$(15,000) & \$ 65,000 \
\text { c. } \$(35,000) & \$ 85,000 \
\text { d. } \$ 20,000 & \$ 30,000 \
\text { e. } \$ 15,000 & \$ 35,000
\end{array}$

Accepted Answer

The answer of Matthew exchanges an investment apartment building for...

Question 14

Natural Power Corporation owns a warehouse with an adjusted basis of $195,000 and an appraised fair market value of $185,000.The city of Springfield condemns the property for a new airport.The condemnation award is $185,000.Natural Power invests the $185,000 in a new warehouse on the other side of the city.What is the gain or loss that Natural Power Corporation must recognize due to the transactions?

Accepted Answer

A) No gain or loss 
B) $10,000 gain 
C) $10,000 loss 
D) $185,000 gain 
A) No gain or loss 
B) $10,000 gain 
C) $10,000 loss 
D) $185,000 gain

Question 15

Which of the following qualify as a like-kind exchange?
-Inventory for office supplies.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 16

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Accepted Answer

A) The date of the actual condemnation. 
B) The date of the threat of condemnation. 
C) Two years before the actual condemnation. 
D) Two years before the threat of condemnation. 
E) Three years after the date of the condemnation. 
A) The date of the actual condemnation. 
B) The date of the threat of condemnation. 
C) Two years before the actual condemnation. 
D) Two years before the threat of condemnation. 
E) Three years after the date of the condemnation.

Question 17

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Accepted Answer

A) True 
 B)False

Question 18

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory?
I.Involuntary conversion of business real estate.
II.Like-kind exchange of business real estate.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 19

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Accepted Answer

A) $160,000 
B) $170,000 
C) $190,000 
D) $200,000 
E) $210,000 
A) $160,000 
B) $170,000 
C) $190,000 
D) $200,000 
E) $210,000

Question 20

Which of the following qualify as a like-kind exchange?
-Land held as an investment for an office building and land used in a business.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

A gain on a like-kind exchange is always recognized to the extent of any boot received.

Which of the following is/are correct concerning a principal residence? I.A principal residence can be a house,condominium,mobile home,or houseboat. II.A taxpayer can have more than one principal residence at a time.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.What is his basis in the new real estate?

Match each statement with the correct term below. -Principal residence

For a transaction to qualify as a third-party exchange, I.The exchange must be completed within 1 year of the first exchange. II.The property exchanged must be identified within 45 days of the first exchange.

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Which of the following qualify as a like-kind exchange? -Land held as an investment for land used in a business.

Which of the following qualify as a like-kind exchange? -Land in London,England for land in San Francisco,California.

Which of the following qualify as a like-kind exchange? -Inventory for office supplies.

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory? I.Involuntary conversion of business real estate. II.Like-kind exchange of business real estate.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Which of the following qualify as a like-kind exchange? -Land held as an investment for an office building and land used in a business.

Federal Income Taxation - an Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses: Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation,depletion,and Amortization

Property Dispositions

Choice of Business Entity - General Tax and Nontax Factorsformation

Choice of Business Entity - Operations and Distributions

Choice of Business Entity - Other Considerations

Tax Research

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Exam 12: Nonrecognition Transactions

A gain on a like-kind exchange is always recognized to the extent of any boot received.

Which of the following is/are correct concerning a principal residence? I.A principal residence can be a house,condominium,mobile home,or houseboat. II.A taxpayer can have more than one principal residence at a time.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.What is his basis in the new real estate?

Match each statement with the correct term below. -Principal residence

For a transaction to qualify as a third-party exchange, I.The exchange must be completed within 1 year of the first exchange. II.The property exchanged must be identified within 45 days of the first exchange.

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Which of the following qualify as a like-kind exchange? -Land held as an investment for land used in a business.

Which of the following qualify as a like-kind exchange? -Land in London,England for land in San Francisco,California.

Which of the following qualify as a like-kind exchange? -Inventory for office supplies.

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory? I.Involuntary conversion of business real estate. II.Like-kind exchange of business real estate.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Which of the following qualify as a like-kind exchange? -Land held as an investment for an office building and land used in a business.

Federal Income Taxation - an Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses: Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation,depletion,and Amortization

Property Dispositions

Choice of Business Entity - General Tax and Nontax Factorsformation

Choice of Business Entity - Operations and Distributions

Choice of Business Entity - Other Considerations

Tax Research

Filters