Exam 9: Nontaxable Exchanges

Kimbo Inc.exchanged an old asset ($180,000 FMV and $145,000 adjusted basis)plus $10,000 cash for a new asset with a $190,000 FMV.What is Kimbo's basis in the new asset if the transaction qualifies as a like-kind exchange?

Grantly Seafood is a calendar year taxpayer.In 2017,a hurricane destroyed three of Grantly's fishing boats with a $784,500 aggregate adjusted tax basis.On October 12,2017,Grantly received a $1.2 million reimbursement from its insurance company.What is the latest date that Grantly can replace the boats to avoid gain recognition from the involuntary conversion?

Perry Inc.and Dally Company entered into an exchange of real property.Here is the information for the properties to be exchanged. Pursuant to the exchange,Perry assumed the mortgage on the Dally property,and Dally assumed the mortgage on the Perry property.Compute Dally's gain recognized on the exchange and its tax basis in the property received from Perry.

Which of the following statements about like-kind exchanges is false?

Eliot Inc.transferred an old asset with a $53,100 adjusted tax basis plus $5,000 cash in exchange for a new asset worth $75,000.Which of the following statements is false?

Texark Inc.,a calendar year taxpayer,reported $5,210,300 net income before tax on its financial statements prepared in accordance with GAAP.The corporation's records reveal the following information. Depreciation expense per books was $713,700,and MACRS depreciation was $662,000. Texark exchanged old equipment (-0- tax basis; $44,200 book basis)for new equipment (FMV $50,000).Book gain was included in book income,although the exchange was nontaxable for tax purposes. Texark received a $100,000 insurance reimbursement for the destruction of machinery with a $29,000 tax basis and a $70,000 book basis.Texark spent $110,000 to replace the machinery before year-end. Compute Texark's taxable income.

Tauber Inc.and J&I Company exchanged like-kind production assets.Tauber's asset had a $17,500 FMV and $3,000 adjusted tax basis,and J&I's asset had a $19,000 FMV and a $9,000 adjusted tax basis.Tauber paid $1,500 cash to J&I as part of the exchange.Which of the following statements is false?