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

Joyce,a farmer,has the following events occur during the tax year.Which of the events qualify as an involuntary conversion under § 1033 (nonrecognition of gain from an involuntary conversion)?

The exchange of personal use property whose holding period is long-term for other personal use property (e.g. ,trade-in of personal use automobiles)can qualify as like-kind property if the personal use property received is held long term.

Taylor inherited 100 acres of land on the death of his father in 2010.A Federal estate tax return was filed and this land was valued therein at $650,000,its fair market value at the date of the father's death.The father had originally acquired the land in 1965 for $112,000 and prior to his death he had expended $20,000 on permanent improvements.Determine Taylor's holding period for the land.

The nonrecognition treatment on realized gains of an indirect involuntary conversion of a factory building under § 1033 is elective,while a like-kind exchange of computers under § 1031 is mandatory.

Nancy and Tonya exchanged assets.Nancy gave Tonya her personal residence with an adjusted basis of $280,000 and a fair market value of $560,000.The house has a mortgage of $200,000 which is assumed by Tonya.Tonya gave Nancy a yacht used in her business with an adjusted basis of $250,000 and a fair market value of $360,000.What is Tonya's realized and recognized gain?

Shontelle received a gift of income-producing property with an adjusted basis of $50,000 to the donor and fair market value of $40,000 on the date of gift.Gift tax of $6,000 was paid by the donor.Shontelle subsequently sold the property for $45,000.What is the recognized gain or loss?

A realized loss whose recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis.

An exchange of business or investment property for like-kind property with a § 267 related party can qualify as a § 1031 like-kind exchange.

A realized gain on an indirect (conversion into money)involuntary conversion of business property can be postponed,but a realized loss on an indirect involuntary conversion of business property cannot be postponed.

Henrietta and Hollis have been married for 10 years when Hollis dies in a sky-diving accident.Their assets are summarized below. Henrietta and Hollis reside in Wisconsin,a community property state.All of the assets were acquired with community funds and pass to Henrietta.Her basis for each of the assets becomes: Car House Cash from life insurance proceeds

Quela,who is single,sells her principal residence which she has owned and occupied for 8 years.Prior to the sale,she made certain repairs to the house.In addition,she incurred realtor's commissions and attorney fees associated with the sale.Quela can reduce the amount realized by the cost of the repairs,the realtor's commission,and the attorney's fee.

In addition to other gifts,Megan made a gift of stock to Jeri in 1975.Megan had purchased the stock in 1973 for $5,000.At the time of the gift,the stock was worth $7,500.If Megan paid $360 of gift tax on the transaction in 1975,what is Jeri's gain basis for the stock?

Which of the following satisfy the time period requirement for postponement of gain as a § 1033 (nonrecognition of gain from an involuntary conversion)involuntary conversion?

Under § 121 (exclusion of gain on sale of principal residence),a married couple can exclude a maximum of $500,000 on a joint return even if one spouse had no ownership interest in the residence.

Broker's commissions and points paid by the seller reduce the seller's amount realized.

Roy exchanges a productive use machine (adjusted basis of $9,000)for a new machine worth $6,000.In addition,he receives cash of $5,000.What is the recognized gain or loss and the basis of the new machine?

This year,Fran receives a birthday gift of stock worth $75,000 from her aunt.The aunt has owned the stock (adjusted basis $50,000)for 10 years and pays gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000)or $75,000.

A condemned office building owned and used in the business by a taxpayer can be replaced by land and qualify for nonrecognition treatment.

If a taxpayer exchanges like-kind property under § 1031 and assumes a liability associated with the property received,the taxpayer is considered to have received boot in the transaction.

The holding period of nontaxable stock rights includes the holding period of the stock on which the rights were distributed.