Question 1

Which of the following qualify as a like-kind exchange?
-Land in London,England for land in San Francisco,California.

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

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 3

Mavis is a schoolteacher with an annual salary of $28,000.Last year she sold a substantial block of securities that she had inherited from her grandmother several years before.She used the proceeds to buy an apartment building in a neighboring community.She realized a $15,000 capital loss on the sale.She carries over $12,000 of the capital loss to the current year.During the current year,a fire destroys the apartment building when its adjusted basis is $100,000.Mavis receives an insurance check for $110,000 and immediately invests it in another apartment building.Advise Mavis how she should deal with these situations for the current tax year.

Accepted Answer

Deferral of realized gains through invol

Question 4

No taxable gain or loss is recognized on a like-kind exchange of an investment asset for a similar asset that will be held for investment if both assets consist of

Accepted Answer

A) Partnership interests. 
B) Convertible debentures. 
C) Mortgage notes 
D) Rental real estate located in different states. 
E) Common stock of companies in the same industry. 
A) Partnership interests. 
B) Convertible debentures. 
C) Mortgage notes 
D) Rental real estate located in different states. 
E) Common stock of companies in the same industry.

Question 5

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

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

Commonalties of nonrecognition transactions include that
I.gains on all transactions must be recognized when the taxpayer has the wherewithal-to-pay.
II.tax attributes carryover from the original asset to the replacement asset.

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 7

Rosilyn trades her old business-use luxury car with an adjusted basis of $13,000 and an outstanding loan liability balance of $2,000 for a new business-use economy 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 amount realized on the transaction?

Accepted Answer

A) $ 3,000 
B) $ 9,000 
C) $12,000 
D) $13,000 
E) $14,000 
A) $ 3,000 
B) $ 9,000 
C) $12,000 
D) $13,000 
E) $14,000

Question 8

Which of the following qualify as a like-kind exchange?
-Computer for delivery truck.

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 9

Which of the following is/are correct regarding involuntary conversions?
I.Gains may be deferred if the property involuntarily converted is replaced with property that is similar to or related in service or use to the converted property.
II.Deferral of gains is elective only if direct conversion is made into similar 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 10

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 11

Rationale for nonrecognition of property transactions exists because of which concept(s)of taxation?
I.Wherewithal-to-Pay Concept.
II.Constructive receipt Doctrine.

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 12

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory?
I.Involuntary conversion of business real estate.
II.Like-kind exchange of business real estate.

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 business use automobile for a personal use automobile.

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

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for his investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is his recognized gain?

Accepted Answer

A) $ - 0 - 
B) $10,000 
C) $20,000 
D) $30,000 
E) $40,000 
A) $ - 0 - 
B) $10,000 
C) $20,000 
D) $30,000 
E) $40,000

Question 15

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 16

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 17

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Accepted Answer

A) $ - 0 - 
B) $425,000 
C) $400,000 
D) $200,000 
E) $175,000 
A) $ - 0 - 
B) $425,000 
C) $400,000 
D) $200,000 
E) $175,000

Question 18

Which of the following exchanges of property are like-kind exchanges?
I.Convenience store owner trades several cases of potato chips for a cash register.
II.A completely rented apartment building traded for a parts supply warehouse to use in business.

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 19

Which of the following qualify as a like-kind exchange?
-An airplane for a duplex apartment.

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 20

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.

Which of the following qualify as a like-kind exchange? -Land in London,England for land in San Francisco,California.

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.

No taxable gain or loss is recognized on a like-kind exchange of an investment asset for a similar asset that will be held for investment if both assets consist of

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

Commonalties of nonrecognition transactions include that I.gains on all transactions must be recognized when the taxpayer has the wherewithal-to-pay. II.tax attributes carryover from the original asset to the replacement asset.

Which of the following qualify as a like-kind exchange? -Computer for delivery truck.

Rationale for nonrecognition of property transactions exists because of which concept(s)of taxation? I.Wherewithal-to-Pay Concept. II.Constructive receipt Doctrine.

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory? I.Involuntary conversion of business real estate. II.Like-kind exchange of business real estate.

Which of the following qualify as a like-kind exchange? -A business use automobile for a personal use automobile.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for his investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is his recognized gain?

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?

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Which of the following exchanges of property are like-kind exchanges? I.Convenience store owner trades several cases of potato chips for a cash register. II.A completely rented apartment building traded for a parts supply warehouse to use in business.

Which of the following qualify as a like-kind exchange? -An airplane for a duplex apartment.

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

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Exam 12: Nonrecognition Transactions

Which of the following qualify as a like-kind exchange? -Land in London,England for land in San Francisco,California.

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.

No taxable gain or loss is recognized on a like-kind exchange of an investment asset for a similar asset that will be held for investment if both assets consist of

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

Commonalties of nonrecognition transactions include that I.gains on all transactions must be recognized when the taxpayer has the wherewithal-to-pay. II.tax attributes carryover from the original asset to the replacement asset.

Which of the following qualify as a like-kind exchange? -Computer for delivery truck.

Rationale for nonrecognition of property transactions exists because of which concept(s)of taxation? I.Wherewithal-to-Pay Concept. II.Constructive receipt Doctrine.

Gain deferral is fundamental to the nonrecognition transactions.In which of the following is gain deferral mandatory? I.Involuntary conversion of business real estate. II.Like-kind exchange of business real estate.

Which of the following qualify as a like-kind exchange? -A business use automobile for a personal use automobile.

Roscoe receives real estate appraised at $200,000 and cash of $10,000 from Cathy in exchange for his investment realty with a basis of $170,000.Roscoe plans to hold the new realty for investment.What is his recognized gain?

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?

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire.Early the following year,Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building.What is the basis in the new building?

Which of the following exchanges of property are like-kind exchanges? I.Convenience store owner trades several cases of potato chips for a cash register. II.A completely rented apartment building traded for a parts supply warehouse to use in business.

Which of the following qualify as a like-kind exchange? -An airplane for a duplex apartment.

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