Question 1

Which of the following qualify as a like-kind exchange?
-Inventory for office supplies.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 2

Match each statement with the correct term below.
-Principal residence

Accepted Answer

A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies. 
A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 3

When two qualified assets are exchanged and their fair market values are not equal,additional nonqualifying property referred to as "boot" can be used to equalize the transaction without disqualifying the nonrecognition transaction.

Accepted Answer

A) True 
 B)False

Question 4

Commonalties of nonrecognition transactions include that
I.deferring a loss is mandatory on like-kind exchanges.
II.deferring a loss is mandatory on involuntary conversions.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 5

Which of the following qualify as a like-kind exchange?
-A personal residence for a vacation home.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 6

The deferral of a gain realized on an involuntary conversion is mandatory.

Accepted Answer

A) True 
 B)False

Question 7

Norman exchanges a machine he uses in his pool construction business for a used machine worth $6,000 to use in the same business.He purchased the machine 3 years ago for $22,000 and has taken depreciation of $9,000 on the machine.In the exchange,Norman also receives $3,000 of cash.As a result of the exchange,
I.Norman's basis in the acquired machine is $10,000.
II.Norman recognizes a loss of $3,000 on the exchange.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 8

Lindsey exchanges investment real estate parcels with Donna.Her adjusted basis in the property is $400,000,and it is encumbered by a mortgage liability of $200,000.Donna assumes the mortgage.Donna's property is appraised at $1,000,000 and is subject to a $100,000 liability.Lindsey assumes the liability.If no cash is exchanged,what is the amount of gain recognized by Lindsey?

Accepted Answer

A) $- 0 - 
B) $100,000 
C) $200,000 
D) $500,000 
E) $900,000 
A) $- 0 - 
B) $100,000 
C) $200,000 
D) $500,000 
E) $900,000

Question 9

Match each statement with the correct term below.
-Third-party exchange

Accepted Answer

A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies. 
A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 10

Which of the following qualify as replacement property under the involuntary conversion rules?
I.Smooth Yogurt Company's warehouse for storing its yogurt curds is condemned by the port authority.The warehouse will be replaced with a new office building in a neighboring community.
II.Smooth Yogurt Company's other warehouse,which was fully leased to another company,is destroyed by a tornado.The warehouse will be replaced with a rental office building adjacent to the company's new office building and will be leased to various tenants.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 11

Match each statement with the correct term below.
-Like-kind property

Accepted Answer

A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies. 
A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 12

Which of the following statements is/are correct?
I.The carryover-holding period only applies if the property exchanged is personal-use property.
II.The holding period of like-kind property received includes the holding period of the property exchanged.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 13

Which of the following qualify as a like-kind exchange?
-A Cadillac automobile used 100% for business for a Ford Mustang automobile used 100% for business.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange 
A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 14

Carrie owns a business building with an adjusted basis of $95,000 and an appraised fair market value of $98,000.The city of Millerville condemns the property for a new highway.The condemnation award is $98,000.Carrie invests $90,000 of the proceeds into a new building on the other side of the city.What is the gain or loss that Carrie must recognize due to the transactions?

Accepted Answer

A) No gain or loss 
B) $3,000 gain 
C) $3,000 loss 
D) $8,000 gain 
E) $5,000 loss 
A) No gain or loss 
B) $3,000 gain 
C) $3,000 loss 
D) $8,000 gain 
E) $5,000 loss

Question 15

Match each statement with the correct term below.
-Boot

Accepted Answer

A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies. 
A) Losses are never deferred. 
B) Can be within the same NAICS Code. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 16

Norm acquired office equipment for his business at a cost of $10,000.After two years of use,Norm exchanges the equipment for different equipment with a fair market value of $7,000.MACRS depreciation on the original equipment was $4,753 The exchange qualifies as a like-kind exchange.Immediately after the exchange Norm sells the new equipment for $7,000 cash.What is the amount and character of the gain recognized?

Accepted Answer

A) No gain or loss. 
B) $1,753 Section 1231 gain. 
C) $1,753 Section 1245 ordinary income. 
D) $4,753 Section 1231 gain. 
E) $4,753 section 1245 ordinary income,and $3,000 Section 1231 loss. 
A) No gain or loss. 
B) $1,753 Section 1231 gain. 
C) $1,753 Section 1245 ordinary income. 
D) $4,753 Section 1231 gain. 
E) $4,753 section 1245 ordinary income,and $3,000 Section 1231 loss.

Question 17

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Accepted Answer

A) $160,000 
B) $170,000 
C) $190,000 
D) $200,000 
E) $210,000 
A) $160,000 
B) $170,000 
C) $190,000 
D) $200,000 
E) $210,000

Question 18

Lindsey exchanges investment real estate parcels with Donna.Lindsay's adjusted basis in the property is $400,000,and it is encumbered by a mortgage liability of $200,000.Donna assumes the mortgage.Donna's property is appraised at $1,000,000 and is subject to a $100,000 liability.Lindsey assumes the liability.If no cash is exchanged,what is Lindsey's basis in the new real estate?

Accepted Answer

A) $- 0 - 
B) $100,000 
C) $200,000 
D) $400,000 
E) $600,000 
A) $- 0 - 
B) $100,000 
C) $200,000 
D) $400,000 
E) $600,000

Question 19

In each of the following cases,determine the amount of realized gain or loss and the recognized gain or loss:
a.Silvia sells her house for $100,000 and she pays $8,000 in commissions on the sale.She paid $110,000 for the house 2 years earlier.
b.In July 2016,Carmen,who is single,is transferred to Dallas.She had purchased a new home in June 20167for $130,000.Carmen sells the house for $165,000 and pays a commission of $10,000 on the sale.
c.Conrad is single and sells his principal residence for $350,000.He pays selling expenses of $20,000.Conrad purchased the house for $65,000 in 1986.

Accepted Answer

The amount she can exclude is the ratio

Question 20

Willie owns 115 acres of land with a fair market value of $57,000.He purchased the land as an investment for $35,000 in 1993.Willie trades the land for a 122-acre parcel adjacent to other property he owns.The 122 acres has a value of $57,000,and the exchange qualifies for like-kind deferral treatment.What is Willie's basis in the new parcel of land?

Accepted Answer

A) $- 0 - 
B) $17,000 
C) $35,000 
D) $57,000 
E) $74,000 
A) $- 0 - 
B) $17,000 
C) $35,000 
D) $57,000 
E) $74,000

Which of the following qualify as a like-kind exchange? -Inventory for office supplies.

Match each statement with the correct term below. -Principal residence

When two qualified assets are exchanged and their fair market values are not equal,additional nonqualifying property referred to as "boot" can be used to equalize the transaction without disqualifying the nonrecognition transaction.

Commonalties of nonrecognition transactions include that I.deferring a loss is mandatory on like-kind exchanges. II.deferring a loss is mandatory on involuntary conversions.

Which of the following qualify as a like-kind exchange? -A personal residence for a vacation home.

The deferral of a gain realized on an involuntary conversion is mandatory.

Match each statement with the correct term below. -Third-party exchange

Match each statement with the correct term below. -Like-kind property

Which of the following statements is/are correct? I.The carryover-holding period only applies if the property exchanged is personal-use property. II.The holding period of like-kind property received includes the holding period of the property exchanged.

Which of the following qualify as a like-kind exchange? -A Cadillac automobile used 100% for business for a Ford Mustang automobile used 100% for business.

Match each statement with the correct term below. -Boot

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Conceptual Foundations of Tax Law

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses -- Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Choice of Business Entity -- General Tax and Nontax Factorsformation

Choice of Business Entity -- Operations and Distributions

Choice of Business Entity -- Other Considerations

Tax Research

Filters

Exam 12: Nonrecognition Transactions

Which of the following qualify as a like-kind exchange? -Inventory for office supplies.

Match each statement with the correct term below. -Principal residence

When two qualified assets are exchanged and their fair market values are not equal,additional nonqualifying property referred to as "boot" can be used to equalize the transaction without disqualifying the nonrecognition transaction.

Commonalties of nonrecognition transactions include that I.deferring a loss is mandatory on like-kind exchanges. II.deferring a loss is mandatory on involuntary conversions. ​

Which of the following qualify as a like-kind exchange? -A personal residence for a vacation home.

The deferral of a gain realized on an involuntary conversion is mandatory.

Match each statement with the correct term below. -Third-party exchange

Match each statement with the correct term below. -Like-kind property

Which of the following statements is/are correct? I.The carryover-holding period only applies if the property exchanged is personal-use property. II.The holding period of like-kind property received includes the holding period of the property exchanged. ​

Which of the following qualify as a like-kind exchange? -A Cadillac automobile used 100% for business for a Ford Mustang automobile used 100% for business.

Match each statement with the correct term below. -Boot

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for Roscoe's investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is the amount realized for the property given up by Roscoe?

Conceptual Foundations of Tax Law

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses -- Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Choice of Business Entity -- General Tax and Nontax Factorsformation

Choice of Business Entity -- Operations and Distributions

Choice of Business Entity -- Other Considerations

Tax Research

Filters

Commonalties of nonrecognition transactions include that I.deferring a loss is mandatory on like-kind exchanges. II.deferring a loss is mandatory on involuntary conversions.

Which of the following statements is/are correct? I.The carryover-holding period only applies if the property exchanged is personal-use property. II.The holding period of like-kind property received includes the holding period of the property exchanged.