Exam 28: Property Transactions: Nontaxable Exchanges

Daniella exchanges business equipment with a $100,000 adjusted basis for $10,000 cash and business equipment with a $96,000 FMV.What is the amount of gain recognized on the exchange?

Under what circumstances can a taxpayer obtain a partial exclusion if a home is sold before the use and ownership tests are satisfied?

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2017,for $950,000.They have lived in the home for 20 years.The basis of the home is $350,000.They purchased a new home for $1,000,000 in August 2017.After living in that home for 219 days,the Connors were forced to sell their new home in 2018 for $1,300,000 and move to another climate due to Ellen's severe health problems. a.What is the amount of gain recognized on the home sale in 2017? b.What is the amount of the gain recognized on the home sale in 2018?

Amber receives a residence ($750,000 FMV,$500,000 adjusted basis)owned for eight years by Jonathan,her former spouse,as part of a divorce settlement.Amber and Jonathan had lived in the home for the four years before the divorce.Seven months after the transfer of the residence,Amber sells it for $790,000.What is the amount of Amber's recognized gain on the sale of the home?

Nicki is single and 46 years old.She sells her principal residence (adjusted basis $200,000)that she purchased ten years ago for $435,000. a.What is the amount of Nicki's recognized gain on the sale? b.Assume instead that Nicki sells the residence for $485,000.What is the amount of Nicki's recognized gain on the sale? c.Assume instead that Nicki has been married to Mike for the entire time they have owned and lived in the home.If they sell the home for $485,000,what is the amount of their recognized gain on the sale?

Pamela owns land for investment purposes.The land is worth $300,000 (basis of $260,000 to Pamela).Pamela exchanges the land,plus $20,000 cash,for a warehouse to be used in her business.The FMV of the warehouse is $400,000,but the warehouse is subject to a mortgage of $80,000,which is assumed by Pamela.Pamela must recognize a gain of

If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property will be condemned,the taxpayer may elect to defer gain even if the taxpayer sells the property to a party other than the governmental unit that is threatening to condemn the property.

Kareem's office building is destroyed by fire on April 11,2017.Settlement is reached with the insurance company on November 1,2017 when he receives a check for $900,000.The property had recently been appraised for $920,000.Kareem's adjusted basis in the building was $800,000. a.What is Kareem's realized gain or loss? b.Assume Kareem wishes to defer the maximum amount of gain.Indicate: (1)the minimum amount that must be spent on a new property. (2)any restrictions on the new property in order for it to qualify. (3)the deadline for placing the new property in service. c.Assume that instead of a fire,the state forces Kareem to sell the property.Indicate how your responses to part b would differ.

Dean exchanges business equipment with a $120,000 adjusted basis for $40,000 cash and business equipment with a $140,000 FMV.What is the amount of gain which Dean recognizes on the exchange?

Rolf exchanges an office building worth $150,000 for investment land worth $175,000.He also provided stock worth $25,000.Rolf's adjusted basis in the building and stock is $130,000 and $11,000,respectively.How much gain will Rolf recognize on the exchange?

Amelia exchanges a commercial fishing boat with a $350,000 adjusted basis for an airplane with a $560,000 fair market value.Both assets are for her business use. a.What is the amount of gain or loss realized by Amelia? b.What is the amount of gain or loss recognized by Amelia?

For purposes of nontaxable exchanges,cash and non-like-kind property constitute boot.

Kole owns a warehouse used in his business which has an adjusted basis of $240,000 and is subject to a mortgage with an $80,000 principal balance.Kole exchanges the warehouse for land worth $320,000.In addition,he receives cash of $40,000.What is Kole's realized gain?

Theresa owns a boat that is held for personal use and has a $100,000 basis.The boat is destroyed by a storm and Theresa collects $120,000 from the insurance company.She purchases a new $150,000 boat for personal use and elects to defer any gain on the transaction.What is the basis of the new boat?

Which of the following statements is false with regard to the ownership and use tests under Sec.121?

Indicate with a "yes" or a "no" which of the following are like-kind exchanges. a.Computer used in trade or business for office furniture used in trade or business. b.Apartment building held as an investment for an office building used in trade or business. c.Land used in trade or business for equipment used in trade or business. d.Printer used in trade or business for printer used for personal purposes. e.Exchange of improved real estate held for investment for unimproved real estate held for investment.

If related taxpayers exchange property qualifying for a like-kind exchange,the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

Which of the following statements is not true with regard to like-kind exchanges?

When an involuntary conversion is due to the condemnation of real property held for productive use in a trade or business or for investment,the replacement period will end three years after the close of the first tax year in which any part of the gain is realized.

The building used in Terry's business was condemned by the city of St.Louis.Terry received a condemnation award of $125,000.He paid $1,200 in lawyer's fees and $800 for an appraisal of the property.Terry's adjusted basis in the building was $60,000.Terry reinvests in similar property costing $110,000,and Terry makes the proper election regarding the property.What is the amount of Terry's recognized gain on the condemnation?