Question 1

Discuss the relationship between realized gain and boot received in a § 1031 like­kind exchange.

Accepted Answer

Realized gain serves as the ceiling on t

Question 2

Pam exchanges a rental building,which has an adjusted basis of $520,000,for investment land which has a fair market value of $700,000.In addition,Pam receives $100,000 in cash.What is the recognized gain or loss and the basis of the investment land?

Accepted Answer

A) $0 and $420,000. 
B) $100,000 and $420,000. 
C) $100,000 and $520,000. 
D) $280,000 and $700,000. 
E) None of these. 
A) $0 and $420,000. 
B) $100,000 and $420,000. 
C) $100,000 and $520,000. 
D) $280,000 and $700,000. 
E) None of these.

Question 3

Discuss the treatment of realized gains from involuntary conversions.

Accepted Answer

Realized gains from involuntary conversi

Question 4

Which of the following satisfy the time period requirement for postponement of gain as a § 1033 (nonrecognition of gain from an involuntary conversion)involuntary conversion?

Accepted Answer

A) Al's business warehouse is destroyed by a tornado on October 31,2014.Al is a calendar year taxpayer.He receives insurance proceeds on December 5,2014.He reinvests the proceeds in another warehouse to be used in his business on December 29,2016. 
B) Heather's personal residence is destroyed by fire on October 31,2014.She is a calendar year taxpayer.She receives insurance proceeds on December 5,2014.She purchases another principal residence with the proceeds on October 31,2016. 
C) Mack's office building is condemned by the city as part of a road construction project.The date of the condemnation is October 31,2014.He is a calendar year taxpayer.He receives condemnation proceeds from the city on that date.He purchases another office building with the proceeds on December 5,2017. 
D) Lizzy's business automobile is destroyed in an accident on October 31,2014.Lizzy is a fiscal year taxpayer with the fiscal year ending on June 30th.She receives insurance proceeds on December 5,2014.She purchases another business automobile with the proceeds on June 1,2017. 
E) All of these. 
A) Al's business warehouse is destroyed by a tornado on October 31,2014.Al is a calendar year taxpayer.He receives insurance proceeds on December 5,2014.He reinvests the proceeds in another warehouse to be used in his business on December 29,2016. 
B) Heather's personal residence is destroyed by fire on October 31,2014.She is a calendar year taxpayer.She receives insurance proceeds on December 5,2014.She purchases another principal residence with the proceeds on October 31,2016. 
C) Mack's office building is condemned by the city as part of a road construction project.The date of the condemnation is October 31,2014.He is a calendar year taxpayer.He receives condemnation proceeds from the city on that date.He purchases another office building with the proceeds on December 5,2017. 
D) Lizzy's business automobile is destroyed in an accident on October 31,2014.Lizzy is a fiscal year taxpayer with the fiscal year ending on June 30th.She receives insurance proceeds on December 5,2014.She purchases another business automobile with the proceeds on June 1,2017. 
E) All of these.

Question 5

Cole exchanges an asset (adjusted basis of $15,000;fair market value of $25,000)for another asset (fair market value of $19,000).In addition,he receives cash of $6,000.If the exchange qualifies as a like-kind exchange,his recognized gain is $6,000 and his adjusted basis for the property received is $21,000 ($15,000 + $6,000 recognized gain).

Accepted Answer

A) True 
 B)False

Question 6

In a nontaxable exchange,recognition is postponed.In a tax-free transaction,nonrecognition is permanent.

Accepted Answer

A) True 
 B)False

Question 7

During 2014,Ted and Judy,a married couple,decided to sell their residence,which had a basis of $300,000.They had owned and occupied the residence for 20 years.To make it more attractive to prospective buyers,they had the outside painted in April at a cost of $6,000 and paid for the work immediately.They sold the house in May for $880,000.Broker's commissions and other selling expenses amounted to $53,000.Since they both are age 68,they decide to rent an apartment.They purchase an annuity with the net proceeds from the sale.What is the recognized gain?

Accepted Answer

A) $0 
B) $17,000 
C) $27,000 
D) $527,000 
E) None of these 
A) $0 
B) $17,000 
C) $27,000 
D) $527,000 
E) None of these

Question 8

Betty owns a horse farm with 500 acres of land (adjusted basis of $600,000).Fifty acres of the land are condemned by the state for $400,000 in order to build a municipal stadium.Since the fair market value of Betty's farm is significantly decreased by the proximity to the future stadium,the state awards Betty $300,000 in severance damages.Betty does not use the $300,000 to restore the usefulness of the farm and all of the $700,000 ($400,000 + $300,000)proceeds are invested in the stock market.What is her recognized gain or loss associated with the receipt of the severance damages?

Accepted Answer

A) $0 
B) $100,000 
C) $300,000 
D) $340,000 
E) None of these 
A) $0 
B) $100,000 
C) $300,000 
D) $340,000 
E) None of these

Question 9

If there is an involuntary conversion (i.e. ,casualty,theft,or condemnation)of the taxpayer's principal residence,the realized gain may be postponed as a § 1033 involuntary conversion and/or excluded as a § 121 sale of a principal residence.

Accepted Answer

A) True 
 B)False

Question 10

To be eligible to elect postponement of gain treatment for an involuntary conversion,what are the three tests for qualifying replacement property?

Accepted Answer

The three tests for qualifying replaceme

Question 11

Molly exchanges a small machine (adjusted basis of $85,000;fair market value of $78,000)used in her business and investment land (adjusted basis of $10,000;fair market value of $15,000)for a large machine (fair market value of $93,000)to be used in her business in a like­kind exchange.What is Molly's recognized gain or loss?

Accepted Answer

A) $0 
B) $5,000 
C) ($2,000) 
D) ($7,000) 
E) None of these 
A) $0 
B) $5,000 
C) ($2,000) 
D) ($7,000) 
E) None of these

Question 12

At a particular point in time,a taxpayer can have two principal residences for § 121 exclusion purposes.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the logic for mandatory deferral of realized gain or loss for a § 1031 like­kind exchange.

Accepted Answer

The property received is considered to b

Question 14

Sidney,a calendar year taxpayer,owns a building (adjusted basis $450,000)in Columbus,OH,in which he conducts his retail computer sales business.The building is destroyed by fire on December 12,2014,and two weeks later he receives insurance proceeds of $600,000.Due to family ties,Sidney decides to move to Columbia,SC.He reinvests all of the insurance proceeds in a building in Columbia where he opens a retail computer sales business on April 2,2015.By electing § 1033,Sidney has no recognized gain and a basis in the new building of $450,000 ($600,000 cost - $150,000 postponed gain).

Accepted Answer

A) True 
 B)False

Question 15

Patty's factory building,which has an adjusted basis of $475,000,is destroyed by fire on April 8,2014.Insurance proceeds of $500,000 are received on June 1,2014.She has a new factory building constructed for $490,000,which she occupies on October 1,2014.Assuming Patty's objective is to minimize the tax liability,calculate her recognized gain or loss and the basis of the new factory building.

Accepted Answer

@#IMG-DLM& Since Patty's objective is to minimize

Question 16

A factory building owned by Amber,Inc.is destroyed by a hurricane.The adjusted basis of the building was $400,000 and the appraised value was $425,000.Amber receives insurance proceeds of $390,000.A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000.What is the recognized gain or loss and what is the basis of the new factory building?

Accepted Answer

A) $0 and $450,000. 
B) $0 and $460,000. 
C) ($10,000)and $440,000. 
D) ($10,000)and $450,000. 
E) None of these. 
A) $0 and $450,000. 
B) $0 and $460,000. 
C) ($10,000)and $440,000. 
D) ($10,000)and $450,000. 
E) None of these.

Question 17

Ramon sells land with an adjusted basis of $120,000 and a fair market value of $175,000 to Pauline,his wife,for $175,000.Discuss how the tax consequences would differ if Ramon and Pauline had never been married.

Accepted Answer

Section 1041 provides that realized gain

Question 18

To qualify for the § 121 exclusion,the property must have been used by the taxpayer for the 5 years preceding the date of sale and owned by the taxpayer as the principal residence for the last 2 of those years.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the relationship between the postponement of realized gain under § 1031 (like­kind exchanges)and the adjusted basis and holding period for the replacement property.

Accepted Answer

Section 1031 results in the mandatory po

Question 20

How does the replacement time period differ for the condemnation of real property used in a trade or business or held for investment when compared with that for other involuntary conversions?

Accepted Answer

The plus two years is replaced

Discuss the relationship between realized gain and boot received in a § 1031 likekind exchange.

Pam exchanges a rental building,which has an adjusted basis of $520,000,for investment land which has a fair market value of $700,000.In addition,Pam receives $100,000 in cash.What is the recognized gain or loss and the basis of the investment land?

Discuss the treatment of realized gains from involuntary conversions.

Which of the following satisfy the time period requirement for postponement of gain as a § 1033 (nonrecognition of gain from an involuntary conversion)involuntary conversion?

In a nontaxable exchange,recognition is postponed.In a tax-free transaction,nonrecognition is permanent.

If there is an involuntary conversion (i.e. ,casualty,theft,or condemnation)of the taxpayer's principal residence,the realized gain may be postponed as a § 1033 involuntary conversion and/or excluded as a § 121 sale of a principal residence.

To be eligible to elect postponement of gain treatment for an involuntary conversion,what are the three tests for qualifying replacement property?

At a particular point in time,a taxpayer can have two principal residences for § 121 exclusion purposes.

Discuss the logic for mandatory deferral of realized gain or loss for a § 1031 likekind exchange.

Ramon sells land with an adjusted basis of $120,000 and a fair market value of $175,000 to Pauline,his wife,for $175,000.Discuss how the tax consequences would differ if Ramon and Pauline had never been married.

To qualify for the § 121 exclusion,the property must have been used by the taxpayer for the 5 years preceding the date of sale and owned by the taxpayer as the principal residence for the last 2 of those years.

Discuss the relationship between the postponement of realized gain under § 1031 (likekind exchanges)and the adjusted basis and holding period for the replacement property.

How does the replacement time period differ for the condemnation of real property used in a trade or business or held for investment when compared with that for other involuntary conversions?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination;an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 15: Property Transactions: Nontaxable Exchanges

Discuss the relationship between realized gain and boot received in a § 1031 like­kind exchange.

Pam exchanges a rental building,which has an adjusted basis of $520,000,for investment land which has a fair market value of $700,000.In addition,Pam receives $100,000 in cash.What is the recognized gain or loss and the basis of the investment land?

Discuss the treatment of realized gains from involuntary conversions.

Which of the following satisfy the time period requirement for postponement of gain as a § 1033 (nonrecognition of gain from an involuntary conversion)involuntary conversion?

In a nontaxable exchange,recognition is postponed.In a tax-free transaction,nonrecognition is permanent.

If there is an involuntary conversion (i.e. ,casualty,theft,or condemnation)of the taxpayer's principal residence,the realized gain may be postponed as a § 1033 involuntary conversion and/or excluded as a § 121 sale of a principal residence.

To be eligible to elect postponement of gain treatment for an involuntary conversion,what are the three tests for qualifying replacement property?

At a particular point in time,a taxpayer can have two principal residences for § 121 exclusion purposes.

Discuss the logic for mandatory deferral of realized gain or loss for a § 1031 like­kind exchange.

Ramon sells land with an adjusted basis of $120,000 and a fair market value of $175,000 to Pauline,his wife,for $175,000.Discuss how the tax consequences would differ if Ramon and Pauline had never been married.

To qualify for the § 121 exclusion,the property must have been used by the taxpayer for the 5 years preceding the date of sale and owned by the taxpayer as the principal residence for the last 2 of those years.

Discuss the relationship between the postponement of realized gain under § 1031 (like­kind exchanges)and the adjusted basis and holding period for the replacement property.

How does the replacement time period differ for the condemnation of real property used in a trade or business or held for investment when compared with that for other involuntary conversions?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination;an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Discuss the relationship between realized gain and boot received in a § 1031 likekind exchange.

Discuss the logic for mandatory deferral of realized gain or loss for a § 1031 likekind exchange.

Discuss the relationship between the postponement of realized gain under § 1031 (likekind exchanges)and the adjusted basis and holding period for the replacement property.