Question 1

Discuss the concepts underlying the determination of the basis of property received in a nontaxable exchange.

Accepted Answer

The underlying concepts include capital

Question 2

Which of the following can be income deferral transactions?
I.Exchanges of like-kind property.
II.Involuntary conversions of property.
​

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 3

A fire destroys David's business building that cost $200,000 in 2005 and had an adjusted basis of $160,000.David's insurance company reimburses him $250,000 for his loss.David promptly reconstructs the building for $230,000.
a.What is the amount and the character of David's minimum recognized gain (loss)?
b.What is the basis of David's new building?

Accepted Answer

The answer of A fire destroys David's business building that...

Question 4

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Accepted Answer

A) The date of the actual condemnation. 
B) The date of the threat of condemnation. 
C) Two years before the actual condemnation. 
D) Two years before the threat of condemnation. 
E) Three years after the date of the condemnation. 
A) The date of the actual condemnation. 
B) The date of the threat of condemnation. 
C) Two years before the actual condemnation. 
D) Two years before the threat of condemnation. 
E) Three years after the date of the condemnation.

Question 5

Which of the following exchanges of property are like-kind exchanges?
I.Common stock of Intel traded for preferred stock of Intel.
II.Principal residence traded for 20 acres of undeveloped investment land.
​

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 6

In general,qualified replacement property for an involuntary conversion must be purchased within one year after the close of the tax year in which the involuntary conversion occurred.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Randy 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.Randy 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 Randy's realized gain on the exchange?

Accepted Answer

A) $- 0 - 
B) $22,000 
C) $35,000 
D) $57,000 
E) $79,000 
A) $- 0 - 
B) $22,000 
C) $35,000 
D) $57,000 
E) $79,000

Question 9

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which has a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's recognized gain or loss due on this transaction?

Accepted Answer

A) $- 0 - 
B) $2,000 
C) $12,000 
D) $16,000 
E) $22,000 
A) $- 0 - 
B) $2,000 
C) $12,000 
D) $16,000 
E) $22,000

Question 10

Which of the following is/are correct regarding the sale of a principal residence?
I.A single taxpayer can only use the $250,000 exclusion once every 3 years.
II.Married taxpayers who both meet the ownership and use tests and file jointly can each exclude $250,000 of gain ($500,000 total)on the sale of their principal residence.
​

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

The holding period of an asset received in a like-kind exchange includes the holding period of the transferred asset.

Accepted Answer

A) True 
 B)False

Question 12

Under the like-kind exchange rules,when like-kind property is traded for like-kind property,a loss on a trade-in is:

Accepted Answer

A) recognized and treated as a capital loss. 
B) recognized and treated as an ordinary loss. 
C) not recognized and increases the basis of the replacement property. 
D) not recognized and decreases the basis of the replacement property. 
E) none of the above. 
A) recognized and treated as a capital loss. 
B) recognized and treated as an ordinary loss. 
C) not recognized and increases the basis of the replacement property. 
D) not recognized and decreases the basis of the replacement property. 
E) none of the above.

Question 13

Which of the following is/are correct concerning a principal residence?
I.A principal residence can be a house,condominium,mobile home,or houseboat.
II.A taxpayer can have more than one principal residence at a time.
​

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 14

Rosilyn trades her old business-use car with an adjusted basis of $13,000 and an outstanding loan liability balance of $2,000 for a new business-use car valued at $9,000 plus $3,000 cash from Bob's Auto Sales and Loan Company.Bob assumes Rosilyn's loan balance.What is Rosilyn's realized gain on the transaction?

Accepted Answer

A) $- 0 - 
B) $1,000 
C) $2,000 
D) $3,000 
E) $5,000 
A) $- 0 - 
B) $1,000 
C) $2,000 
D) $3,000 
E) $5,000

Question 15

Which of the following qualify as a like-kind exchange?
-Microsoft common stock for Merrill Lynch common stock.

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 16

Violet exchanges investment real estate with Russell.Violet's adjusted basis in her two-year old property is $280,000.The property is encumbered by a mortgage of $100,000 and has a fair market value of $320,000 when exchanged.Russell assumes that debt.Russell paid $80,000 cash for his property in 1999 and it is appraised at $150,000 on the day of the exchange.Russell pays Violet enough in cash to balance the exchange.What is Russell's recognized gain (loss)on the exchange?

Accepted Answer

A) $-0- 
B) $70,000 
C) $80,000 
D) $150,000 
A) $-0- 
B) $70,000 
C) $80,000 
D) $150,000

Question 17

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Accepted Answer

A) True 
 B)False

Question 18

Discuss the type of property that is qualified replacement property for involuntary conversion provisions for gain deferrals.

Accepted Answer

Qualified replacement property must be "

Question 19

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which had a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's basis in the new oven?

Accepted Answer

A) $12,000 
B) $16,000 
C) $20,000 
D) $22,000 
E) $32,000 
A) $12,000 
B) $16,000 
C) $20,000 
D) $22,000 
E) $32,000

Question 20

Which of the following qualify as replacement property under the involuntary conversion rules?
I.Mayfield Ice Cream Company's production plant is destroyed by a hurricane.The insurance proceeds are used to replace the plant with a refrigerated storage container.
II.Mayfield Ice Cream Company's production plant is destroyed by a fire.They sign a five year lease for a replacement production facility,and the insurance proceeds are then used to buy an office building
​

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.

Discuss the concepts underlying the determination of the basis of property received in a nontaxable exchange.

Which of the following can be income deferral transactions? I.Exchanges of like-kind property. II.Involuntary conversions of property.

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Which of the following exchanges of property are like-kind exchanges? I.Common stock of Intel traded for preferred stock of Intel. II.Principal residence traded for 20 acres of undeveloped investment land.

In general,qualified replacement property for an involuntary conversion must be purchased within one year after the close of the tax year in which the involuntary conversion occurred.

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

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which has a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's recognized gain or loss due on this transaction?

The holding period of an asset received in a like-kind exchange includes the holding period of the transferred asset.

Under the like-kind exchange rules,when like-kind property is traded for like-kind property,a loss on a trade-in is:

Which of the following is/are correct concerning a principal residence? I.A principal residence can be a house,condominium,mobile home,or houseboat. II.A taxpayer can have more than one principal residence at a time.

Which of the following qualify as a like-kind exchange? -Microsoft common stock for Merrill Lynch common stock.

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Discuss the type of property that is qualified replacement property for involuntary conversion provisions for gain deferrals.

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which had a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's basis in the new oven?

Federal Income Taxation-An Overview

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: Non-Recognition Transactions

Discuss the concepts underlying the determination of the basis of property received in a nontaxable exchange.

Which of the following can be income deferral transactions? I.Exchanges of like-kind property. II.Involuntary conversions of property. ​

The earliest date that condemned property can be replaced and still qualify for involuntary conversion (nonrecognition)treatment is

Which of the following exchanges of property are like-kind exchanges? I.Common stock of Intel traded for preferred stock of Intel. II.Principal residence traded for 20 acres of undeveloped investment land. ​

In general,qualified replacement property for an involuntary conversion must be purchased within one year after the close of the tax year in which the involuntary conversion occurred.

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

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which has a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's recognized gain or loss due on this transaction?

The holding period of an asset received in a like-kind exchange includes the holding period of the transferred asset.

Under the like-kind exchange rules,when like-kind property is traded for like-kind property,a loss on a trade-in is:

Which of the following is/are correct concerning a principal residence? I.A principal residence can be a house,condominium,mobile home,or houseboat. II.A taxpayer can have more than one principal residence at a time. ​

Which of the following qualify as a like-kind exchange? -Microsoft common stock for Merrill Lynch common stock.

Nancy purchased her houseboat six years ago for $35,000.She has lived in the houseboat since she purchased it.A friend has offered $62,000 for the houseboat.If she sells it,she will be able to exclude the gain.

Discuss the type of property that is qualified replacement property for involuntary conversion provisions for gain deferrals.

Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which had a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's basis in the new oven?

Federal Income Taxation-An Overview

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

Which of the following can be income deferral transactions? I.Exchanges of like-kind property. II.Involuntary conversions of property.

Which of the following exchanges of property are like-kind exchanges? I.Common stock of Intel traded for preferred stock of Intel. II.Principal residence traded for 20 acres of undeveloped investment land.

Which of the following is/are correct concerning a principal residence? I.A principal residence can be a house,condominium,mobile home,or houseboat. II.A taxpayer can have more than one principal residence at a time.