Exam 24: Property Transactions: Nontaxable Exchanges

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.

Bob owns a warehouse that is used in business while Rebecca owns land.Bob exchanges the warehouse for the land,which will be held for investment.The FMV of the warehouse is $440,000 (basis $240,000),but the warehouse is subject to a mortgage of $80,000,which is assumed by Rebecca.Bob receives $40,000 cash and the land,which has a FMV of $320,000. Bob realizes a gain (loss)on the exchange of

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 involuntary conversion provisions which allow deferral of gain are mandatory.

A owns a ranch in Wyoming,which B offers to purchase.A is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana.The complex is available for sale.B purchases the apartment complex in Louisiana from C and transfers it to A in exchange for A's ranch.The ranch and the complex each have a $1,000,000 fair market value.Which of the following is true?

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

The taxpayer must be occupying the residence at the time of the sale in order for Sec.121 to apply.

All of the following qualify as a like-kind exchange except

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?

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?

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

The building used in Manuel's business was condemned by the city of Mobile.Manuel received a condemnation award of $220,000.He paid $800 in lawyer's fees and $600 for an appraisal of the property.Manuel's adjusted basis in the building was $120,000.Manuel reinvests in similar property costing $200,000,and Manuel makes the proper election regarding the property. Manuel's basis in the new building is

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?

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2014 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 2014.After living in that home for 219 days,the Connors were forced to sell their new home in 2015 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 2014? b.What is the amount of the gain recognized on the home sale in 2015?

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

All of the following are true except:

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

Cassie owns a Rembrandt painting she acquired on June 1,2008 as an investment.She exchanges the painting on September 5,2014,for a Picasso sculpture and marketable securities to be held as an investment.On what date does the sculpture's holding period begin?

Frank,a single person age 52,sold his home this year. He had lived in the house for 10 years. He signed a contract on March 4 to sell his home and closed the sale on May 3. Based on these facts,what is the amount of his recognized gain?

Ed owns a racehorse with a $600,000 basis used for breeding purposes.The racehorse is killed in a tornado,and Ed collects $1,000,000 from the insurance company.He purchases another horse for $550,000.What is the amount of gain recognized on the transaction?