Exam 12: Property Transactions: Nontaxable Exchanges

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

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?

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2013 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 2013.After living in that home for 219 days,the Connors were forced to sell their new home in 2014 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 2013? b.What is the amount of the gain recognized on the home sale in 2014?

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?

According to Sec.121,individuals who sell or exchange their personal residence may exclude part or all of the gain if the house was owned and occupied as a principal residence for

Olivia exchanges land with a $50,000 basis plus marketable securities with a $20,000 basis for a larger parcel of land worth $110,000 in a transaction that otherwise qualifies as a like-kind exchange.The FMV of the land and marketable securities exchanged by Olivia is $75,000 and $35,000 respectively. a.What is the amount of gain realized and recognized by Olivia on each asset? b.What is the amount of Olivia's basis in the new land?

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?

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?

Gena exchanges land held as an investment with a $60,000 basis for other land with a $80,000 FMV and a motorcycle with a $10,000 FMV.The acquired land is to be held for investment and the motorcycle is for personal use.What is the amount of recognized gain?

The exchange of a personal-use automobile for stock in an automobile manufacturer held as an investment qualifies for like-kind treatment.

The Smiths owned and used their principal residence,with an adjusted basis of $250,000,for ten years.The house is destroyed by a tornado and the Smiths receive insurance proceeds of $800,000.Six months later,they purchase another residence for $850,000. a.What is the amount of gain the Smiths must recognize? b.What is the basis of the new residence?

Indicate with a "yes" or a "no" which of the following are like-kind exchanges (assume all assets are held for business or investment purposes). a.Exchange of common stock held as an investment for land held as an investment. b.Exchange of farmland for an apartment building. c.Exchange of office furniture used in trade or business for computer used in a trade or business d.Exchange of unimproved real estate for improved real estate. e.Exchange of automobile used in trade or business for office building used in trade or business

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

All of the following are true except:

If an exchange qualifies as a like-kind exchange,nonrecognition of gain or loss is elective.

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?

Real property exchanged for personal property qualifies as a like-kind exchange.

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.

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

Mitchell and Debbie,both 55 years old and married,sell their personal residence to Sophie.Sophie pays $225,000 and assumes their $70,000 mortgage.To make the sale they pay $4,000 in commissions and $1,000 in legal costs.They have owned and lived in the house for seven years and their tax basis is $125,000.What is the amount of gain recognized on the sale?