Exam 12: Non-Recognition Transactions

Donald and Candice sell their home for $695,000, incurring selling expenses of $30,000. They purchased the residence for $125,000 and made capital improvements totaling $20,000 during the 20 years they lived there. What is their realized gain and recognized gain on the sale? ? Realized Recognized A) $\$ 665,000 \quad \$20,000$ B) $\$ 520,000 \quad \$-0-$ C) $\$ 520,000 \quad \$ 20,000$ D) $\$ 540,000 \quad \$40,000$ E) $\$520,000 \quad \$270,000$

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?

Match each statement with the correct term below. -Boot

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 recognized gain on the transaction?

The recognition of a loss realized on an involuntary conversion is mandatory.

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?

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

Charlotte purchases a residence for $105,000 on April 13, 2008. On July 1, 2016, she marries Howard and they use Charlotte's house as their principal residence. On May 12, 2018, they sell their home for $390,000, incurring $20,000 of selling expenses and purchase another residence costing $350,000. What is their realized and recognized gain? ? Realized Recognized A) $\$ 265,000 \quad \$-0-$ B) $\$ 265,000 \quad \$ 15,000$ C) $\$ 285,000 \quad \$ 65,000$ D) $\$ 265,000 \quad \$45,000$ E) $\$ 285,000 \quad \$-0-$

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

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

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?

Which of the following qualifies as a like-kind exchange of property? I.Inventory for inventory. II.Office equipment for a delivery van. ​

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.

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? -Land in London, England for land in San Francisco, California.

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

Which of the following qualify as a like-kind exchange? -Coke-Cola bonds for General Foods bonds.

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?

The mechanism for effecting a deferral in a nonrecognition transaction is an adjustment of the replacement asset's basis.

Ed and Elise got married during the year and they each sold their homes to buy a new house for them to live in. As long as they file a joint return they can each claim a $250,000 exclusion.