Exam 28: Property Transactions: Nontaxable Exchanges

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?

Hannah,a single taxpayer,sold her primary residence on January 1,2017.Her total realized gain is $210,000.The house was acquired on January 1,2007,and rented to tenants until December 31,2013.Hannah moved in on January 1,2014,and used the house as her principal residence until the sale.During the rental period,$30,000 of depreciation was deducted.Due to the sale of the house in 2017,Hannah will recognize a gain of

Patricia exchanges office equipment with an adjusted basis of $20,000 for $5,000 cash and office equipment with a fair market value of $12,000. a.What is the gain or loss realized? b.What is the gain or loss recognized? c.What is the adjusted basis of the new office equipment?

Alex owns an office building which the state condemns on January 15,2017.Alex receives the condemnation award on April 1,2017.In order to qualify for nonrecognition of gain on this involuntary conversion,what is the last date for Alex to acquire qualified replacement property?

Yael exchanges an office building worth $150,000 for investment land worth $175,000.Yael also transferred stock worth $25,000 to the other party.Yael's adjusted basis in the building and stock is $180,000 and $11,000,respectively.How much gain or loss will Yael recognize on the exchange?

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

Whitney exchanges timberland held as an investment for undeveloped land with a $300,000 FMV.Whitney's basis for the timberland is $150,000.She also transfers her tractor with a $15,000 basis and a $10,000 FMV as part of the exchange. a.What is the amount,if any,of gain or loss recognized on the transaction? b.What is the basis of the undeveloped land?

The exchange of a partnership interest for an interest in another partnership qualifies as a like-kind exchange.

Ron's building,which was used in his business,was destroyed in a fire.Ron's adjusted basis in the building was $210,000,and its FMV was $330,000.Ron filed an insurance claim and was reimbursed $300,000.In that same year,Ron invested $240,000 of the insurance proceeds in another business building.Ron's basis in the new building is

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.

A taxpayer sells her principal residence of five years and qualifies to exclude her full $100,000 gain.The taxpayer must report this excluded gain on her tax return for the year of sale.

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

In the case of married taxpayers,an individual may claim the Sec.121 exclusion even if the individual's spouse used the exclusion within the past two years.

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?

Rosa exchanges business equipment with a $60,000 adjusted basis for a like-kind piece of equipment with a $100,000 FMV and $20,000 of marketable securities.What is Rosa's basis for the new equipment?

The exchange of antiques held for investment purposes for stock in an antiques auction house held as an investment qualifies for like-kind treatment.

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

Where non-like-kind property other than cash is received as boot,the amount of the boot is the property's fair market value.

Ron and Fay live in Buffalo.They also own a condominium in Orlando (purchased in 2011)which they rent to vacationers.Ron and Fay will be retiring.They plan to live in the Orlando property for two and a half years.When they sell it,they will be able to exclude the full gain which is expected to be about $200,000.

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