Exam 12: Special Property Transactions

Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

Gain realized on a like-kind exchange is excluded from income in all of the following circumstances except:

The "similar or related in service or use" requirement for property involuntarily converted is less restrictive than the like-kind exchange requirements.

Raymond and Susan are married and 55 years old.They sell their personal residence for $850,000 cash.They purchased the house fifteen years ago for $200,000.What is the amount of gain that Raymond and Susan should recognize on the sale?

Edith owns farm land in western Montana.Her adjusted basis is $300,000 and the land is subject to a mortgage of $150,000.She exchanges her land for investment land in Wyoming owned by Dale.The investment land is worth $450,000.Dale assumes Edith's mortgage on the land.What is the amount of Edith's recognized gain or loss on the exchange and what is her adjusted basis in the land she received?

A wash sale occurs when:

The property to be received in a like-kind exchange must be identified within:

Raymond exchanges a rental lake house with an adjusted basis of $200,000 and fair market value of $320,000 for a rental beach house with a fair market value of $290,000 and $30,000 cash.What are the recognized gain or loss and the basis of the beach house?

Lee sells equipment basis $10,000)to related party,Lee Construction Inc.,for $6,000.The $4,000 loss is:

The installment method cannot be used to report the gain on which of the following assets?

All of the following taxpayers can use the installment method to report gains from the sale of assets except:

Louis,who is single,sold his house in St.Louis at a gain of $240,000 on June 8,2016.He properly excluded the gain.He took another job in Memphis.He purchased a new home in Memphis for $225,000 on August 5,2016.Louis was transferred by his employer to New Orleans.Louis sold his Memphis house at a $36,000 gain on October 15,2016.What is Louis's recognized gain on the Memphis house?

Libby exchanges a building she uses in her rental business for a building owned by Randy which she will use in her rental business.The adjusted basis of Libby's building is $80,000 and the fair market value is $125,000.The adjusted basis of Randy's building is $40,000 and the fair market value is $125,000.What is Libby's recognized gain on the transaction and her adjusted basis in the building she receives?

No deduction is allowed with respect to any loss from the sale or exchange of property,directly or indirectly,between related parties.

Taxpayers are required to use the installment method for deferred payments unless the taxpayer elects not to use the installment method.

Jasmine sold land for $250,000 in 2016.The land had a basis of $118,000 and she incurred selling expenses of $10,000.Jasmine received $50,000 down in 2016 and will receive five additional annual payments of $40,000 each.How much income will Jasmine recognize in 2017 when she receives the first additional payment of $40,000?

The installment method cannot be used to report gain from the sale of stock or securities that are traded on an established securities market.

The election to defer a gain under the involuntary conversion rules is reported on:

Sanjay exchanges a warehouse he uses in his rental business for a building owned by Sidney which he will use in his rental business.The adjusted basis of Sanjay's building is $320,000 and the fair market value is $500,000.The adjusted basis of Sidney's warehouse is $160,000 and the fair market value is $500,000.Which of the following statements is correct?

Julia exchanges a machine used in her business with Elvira for another machine.The basis of Julia's old machine is $100,000,FMV is $132,000,and she gives Elvira cash of $28,000.Elvira's basis in her machine is $140,000 and the FMV is $160,000.What,if any,gain is recognized on the transaction and what is the adjusted basis of the property received by Julia and by Elvira?