Question 1

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Sale of personal residence

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)  B

Question 2

Zandu Corporation exchanged a building (fair market value = $1,000,000, adjusted basis = $700,000) and two semi-tractor-trailers (fair market value = $300,000; adjusted basis = $225,000), all five years old, for land to build a new facility valued at $1,300,000. What is Zandu's realized and recognized gain and its basis in the land?
$\begin{array}{lll}
&\text { Realized gain } & \text { Recognized gain } & \text { Basis of land } \
a.&0 & 0 & \$ 925,000 \
b.&\$ 75,000 & \$ 75,000 & \$ 1,000,000 \
c.&\$ 300,000 & \$ 300,000 & \$ 1,300,000 \
d.&\$ 375,000 & \$ 75,000 & \$ 1,000,000
\end{array}$

Accepted Answer

D

Question 3

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Loss on personal auto sale

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)  B

Question 4

Elizabeth exchanges her retail storage assets for retail displays. In this like-kind exchange, Elizabeth receives $2,000 in cash. The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000. The displays have a fair market value of $10,000 and a basis of $8,000.
-Refer to the information in problem 36. What is Elizabeth's basis in the displays received in the exchange?

Accepted Answer

A)  $9,000 
B)  $6,000 
C)  $3,000 
D)  zero 
A)  $9,000 
B)  $6,000 
C)  $3,000 
D)  zero

Question 5

Elizabeth exchanges her retail storage assets for retail displays. In this like-kind exchange, Elizabeth receives $2,000 in cash. The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000. The displays have a fair market value of $10,000 and a basis of $8,000.
-Refer to the information in problem 36. What is Elizabeth's recognized gain on the exchange?

Accepted Answer

A)  zero 
B)  $2,000 
C)  $6,000 
D)  $9,000 
A)  zero 
B)  $2,000 
C)  $6,000 
D)  $9,000

Question 6

A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation.
-Refer to the information in problem 25. What is AB Corporation's basis for the real property?

Accepted Answer

A)  $300,000 
B)  $310,000 
C)  $320,000 
D)  $330,000 
E)  None of the above 
A)  $300,000 
B)  $310,000 
C)  $320,000 
D)  $330,000 
E)  None of the above

Question 7

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Sale of qualifying small business stock

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)

Question 8

A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation.
-Refer to the information in problem 25. What is B's basis for his AB stock?

Accepted Answer

A)  $340,000 
B)  $320,000 
C)  $310,000 
D)  $300,000 
E)  None of the above 
A)  $340,000 
B)  $320,000 
C)  $310,000 
D)  $300,000 
E)  None of the above

Question 9

Juan owned a small rental property, which was condemned by the county to expand a local park. His adjusted basis in the property was $40,000 and he received a payment of $75,000 from the county. A year later he purchased a similar piece of real estate for $70,000.
-Refer to the information in problem 39. What is Juan's basis in the replacement property?

Accepted Answer

A)  $40,000 
B)  $45,000 
C)  $50,000 
D)  $70,000 
E)  $75,000 
A)  $40,000 
B)  $45,000 
C)  $50,000 
D)  $70,000 
E)  $75,000

Question 10

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Involuntary conversion

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)

Question 11

How much does a taxpayer in the 35 percent tax bracket save by deferring a $1,000,000 gain for 3 years using a 6 percent discount rate for evaluation?

Accepted Answer

A)  $350,000 
B)  $294,000 
C)  $160,000 
D)  $56,000 
E)  None of the above 
A)  $350,000 
B)  $294,000 
C)  $160,000 
D)  $56,000 
E)  None of the above

Question 12

A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation.
-Refer to the information in problem 25. What is A's basis for his AB stock?

Accepted Answer

A)  $180,000 
B)  $170,000 
C)  $160,000 
D)  $150,000 
E)  None of the above 
A)  $180,000 
B)  $170,000 
C)  $160,000 
D)  $150,000 
E)  None of the above

Question 13

A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation.
-Refer to the information in problem 25. What is AB Corporation's basis for the machines?

Accepted Answer

A)  $150,000 
B)  $160,000 
C)  $170,000 
D)  $180,000 
E)  None of the above 
A)  $150,000 
B)  $160,000 
C)  $170,000 
D)  $180,000 
E)  None of the above

Question 14

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Accepted Answer

A)  ($50,000), ($50,000) 
B)  ($50,000), 0 
C)  $50,000, $50,000 
D)  0, 0 
E)  None of the above 
A)  ($50,000), ($50,000) 
B)  ($50,000), 0 
C)  $50,000, $50,000 
D)  0, 0 
E)  None of the above

Question 15

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Wash sale

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)

Question 16

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

Accepted Answer

A)  0 
B)  $4,000 
C)  $10,000 
D)  $20,000 
A)  0 
B)  $4,000 
C)  $10,000 
D)  $20,000

Question 17

Willow Corporation exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by Tree Corporation valued at $350,000 (adjusted basis = $200,000) and $50,000 cash. In addition, Willow assumed the $150,000 mortgage on Tree's building.
-Refer to the information in the preceding question. What are Willow's and Tree's recognized gain or loss, respectively?

Accepted Answer

A)  0, 0 
B)  $50,000, $100,000 
C)  $50,000, $150,000 
D)  $75,000, $150,000 
E)  None of the above 
A)  0, 0 
B)  $50,000, $100,000 
C)  $50,000, $150,000 
D)  $75,000, $150,000 
E)  None of the above

Question 18

Carol and Sugar form a corporation. Carol transfers property valued at $550,000 (basis of $400,000) to the corporation in exchange for 50 percent of the corporate stock valued at $500,000. Sugar transfers property valued at $700,000 (basis of $400,000) and a $300,000 mortgage that the corporation assumes for the other 50 percent of the stock. In addition Sugar transfers $100,000 cash to the corporation and the corporation then transfers $50,000 cash to Carol along with the corporate stock. What are Carol and Sugar's realized and recognized gains or losses and their bases in the stock received. What is the corporation's basis in the assets received?

Accepted Answer

Total value of stock = $550,000 + $700,0

Question 19

Willow Corporation exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by Tree Corporation valued at $350,000 (adjusted basis = $200,000) and $50,000 cash. In addition, Willow assumed the $150,000 mortgage on Tree's building. What are Willow and Tree's realized gains or losses on the properties exchanged, respectively?

Accepted Answer

A)  $75,000, 0 
B)  $75,000, $150,000 
C)  $225,000, $150,000 
D)  $225,000, $200,000 
E)  None of the above 
A)  $75,000, 0 
B)  $75,000, $150,000 
C)  $225,000, $150,000 
D)  $225,000, $200,000 
E)  None of the above

Question 20

Identify the following provisions as deferral (D) or exclusion (E) provisions.
-Corporate reorganization

Accepted Answer

A) deferral(
D)  
B) exclusion(
E)  
A) deferral(
D)  
B) exclusion(
E)

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Sale of personal residence

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Loss on personal auto sale

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Sale of qualifying small business stock

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Involuntary conversion

How much does a taxpayer in the 35 percent tax bracket save by deferring a $1,000,000 gain for 3 years using a 6 percent discount rate for evaluation?

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Wash sale

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Corporate reorganization

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters

Exam 8: Tax-Deferred Exchanges

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Sale of personal residence

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Loss on personal auto sale

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Sale of qualifying small business stock

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Involuntary conversion

How much does a taxpayer in the 35 percent tax bracket save by deferring a $1,000,000 gain for 3 years using a 6 percent discount rate for evaluation?

Sam's land was condemned for a sewage treatment plant. He received $600,000 for the land that had a basis of $650,000. What is his realized and recognized gain or loss, respectively, on this involuntary conversion?

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Wash sale

Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal's recognized gain or loss on these transfers?

Identify the following provisions as deferral (D) or exclusion (E) provisions. -Corporate reorganization

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters