Exam 13: Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

To qualify for nonrecognition treatment,an office building destroyed by fire can be replaced with another office building in a different state.

Which of the following statements is correct?

The adjusted basis of property that is stolen is reduced by the amount of insurance proceeds received and by any recognized loss.

The basis for gain and loss of personal use property converted to business use is the lower of the adjusted basis or the fair market value on the date of conversion.

If boot is received in a § 1031 like-kind exchange and gain is recognized,which formula correctly calculates the basis for the like-kind property received?

The basis of property acquired in a wash sale is its cost plus the loss recognized on the wash sale.

During 2010,Ted and Judy,a married couple,decided to sell their residence,which had a basis of $225,000.They had owned and occupied the residence for 16 years.To make it more attractive to prospective buyers,they had the outside painted in April at a cost of $10,000 and paid for the work immediately.They sold the house in May for $795,000.Broker's commissions and other selling expenses amounted to $45,000.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 realized gain?

Which of the following statements is incorrect for a § 1033 involuntary conversion?

When a taxpayer has purchased several lots of stock on different dates at different purchase prices and cannot identify the lot of stock that is being sold,he may choose which lot of stock is deemed to be sold.

Noelle owns an automobile which she uses for personal use.Her adjusted basis is $40,000 (i.e. ,the original cost).The car is worth $24,000.Which of the following statements is correct?

Purchased goodwill is assigned a basis,but developed or self-created goodwill is not assigned a basis.

Agnes,a calendar year taxpayer,lists her principal residence with a realtor on April 3,2010,enters into a contract to sell on May 28,2010,and sells (i.e. ,the closing date)the residence on June 30,2010.The realized gain on the sale is $212,000.Which date is the appropriate ending date in determining if the residence has been owned and used by the taxpayer as the principal residence for at least two years during the prior five-year period?

Monroe's delivery truck is damaged in an accident.Monroe's adjusted basis for the delivery truck prior to the accident is $20,000.If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000,his adjusted basis for the delivery truck after the accident is $21,000.

Expenditures made for ordinary repairs and maintenance of property are not added to the original basis in the determination of the property's adjusted basis whereas capital expenditures are added to the original basis.

The holding period of like-kind property received in a like-kind exchange includes the holding period of the property given up.

Melba gives her niece a drill press to use in her business with a fair market value of $36,000 and a basis in Melba's hands of $41,000.What is the niece's basis for depreciation (cost recovery)?

Which of the following is correct?

The alternate valuation date amount cannot be elected if the property in the estate appreciates in value during the six-month period after death.

Parker bought a brand new Ferrari on January 1,2010,for $125,000.Parker was fatally injured in an auto accident on June 23,2010,when the fair market value of the car was $98,000.In his will,Parker left the Ferrari to his best friend,Ryan.Ryan's holding period for the Ferrari begins on January 1,2010.

A building located in Virginia (used in business)exchanged for a building located in France (used in business)cannot qualify for like-kind exchange treatment.