Question 1

Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.

Accepted Answer

The answer of Discuss the relationship between realized gain and...

Question 2

Butch sells land with an adjusted basis of $88,000 and a fair market value of $160,000 to Cynthia,his wife,for $160,000.Discuss how the tax consequences would differ if Butch and Cynthia had never been married.

Accepted Answer

The answer of Butch sells land with an adjusted basis...

Question 3

Under the taxpayer-use test for a § 1033 involuntary conversion,the taxpayer has less flexibility in qualifying replacement property than under the functional-use test.

Accepted Answer

A) True 
 B)False

Question 4

Maud exchanges a rental house at the beach with an adjusted basis of $475,000 and a fair market value of $460,000 for a rental house at the mountains with a fair market value of $400,000 and cash of $60,000.What is the recognized gain or loss?

Accepted Answer

A)  $0. 
B)  $50,000. 
C)  $60,000. 
D)  ($15,000). 
E)  None of the above.

Question 5

The exchange of unimproved real property located in Topeka (KS)for improved real property located in Atlanta (GA)does not qualify as a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Taxpayer owns a home in Atlanta.His company transfers him to Chicago on January 2,2012,and he sells the Atlanta house in early February.He purchases a residence in Chicago on February 3,2012.On December 15,2012,taxpayer's company transfers him to Los Angeles.In January 2013,he sells the Chicago residence and purchases a residence in Los Angeles.Because multiple sales have occurred within a two-year period,§ 121 treatment does not apply to the sale of the second home.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following types of transactions qualify for nonrecognition treatment?

Accepted Answer

A)  Exchange by a shareholder of stock in Chevron for stock in Shell. 
B)  Investment of the proceeds from the sale of the stock of a publicly traded company in the common stock of a specialized small business investment company (SSBI
C)  within 60 days of the sale. 
C)  Investment of proceeds from the sale of qualified small business stock in another qualified small business stock within 60 days of the sale. 
D)  Only b. and c. 
E)  a., b., and c.

Question 9

Brett owns investment land located in Tucson,Arizona.He exchanges it for other investment land.In which of the following locations may the other investment land be located and enable Brett to qualify for § 1031 like-kind exchange treatment?

Accepted Answer

A)  Mexico City, Mexico. 
B)  Toronto, Canada. 
C)  Paris, France. 
D)  Only a. and b. 
E)  None of the above.

Question 10

To qualify as a like-kind exchange,real property must be exchanged either for other real property or for personal property with a statutory life of at least 39 years.

Accepted Answer

A) True 
 B)False

Question 11

Larry,who lived in Maine,acquired a personal residence eight years ago when he was 42 years old.During this period he has occupied the residence for only nine months (out of 12)each year due to winter vacations in Florida.Is Larry eligible for exclusion of gain under § 121?

Accepted Answer

The answer of Larry,who lived in Maine,acquired a personal residence...

Question 12

Sammy exchanges equipment used in his business in a like-kind exchange.The property exchanged is as follows:
  The other party assumes the liability.

Accepted Answer

The answer of Sammy exchanges equipment used in his business...

Question 13

In determining the basis of like-kind property received,postponed losses are:

Accepted Answer

A)  Added to the basis of the old property. 
B)  Subtracted from the basis of the old property. 
C)  Added to the fair market value of the like-kind property received. 
D)  Subtracted from the fair market value of the like-kind property received. 
E)  None of the above.

Question 14

Pierce exchanges an asset (adjusted basis of $14,000; fair market value of $18,000)for another asset (fair market value of $15,000).In addition,he receives cash of $3,000.If the exchange qualifies as a like-kind exchange,his recognized gain is $3,000 and his adjusted basis for the property received is $17,000 ($14,000 + $3,000 recognized gain).

Accepted Answer

A) True 
 B)False

Question 15

Which of the following exchanges qualifies for nonrecognition treatment as a § 1031 like-kind exchange?

Accepted Answer

A)  Airplane used in a business for 1,000 shares of Blue, Inc., stock. 
B)  Computer used in a business for wooden filing cabinets to be used in a business. 
C)  Female cow for a male cow. 
D)  Land in Spain for land in Florida. 
E)  None of the above.

Question 16

The nonrecognition of gains and losses under § 1031 is mandatory for gains and elective for losses.

Accepted Answer

A) True 
 B)False

Question 17

What types of exchanges of insurance contracts are eligible for nonrecognition treatment under § 1035?

Accepted Answer

The answer of What types of exchanges of insurance contracts...

Question 18

Section 1033 (nonrecognition of gain from an involuntary conversion)applies to both gains and losses.

Accepted Answer

A) True 
 B)False

Question 19

Gabe's office building (adjusted basis of $430,000; fair market value of $500,000)is destroyed by a hurricane.Due to a 20% co-insurance clause,Gabe receives insurance proceeds of only $400,000.If Gabe purchases an office building for $500,000 one month later,its adjusted basis is $530,000 ($500,000 cost + $30,000 postponed loss).

Accepted Answer

A) True 
 B)False

Exam 15: Property Transactions: Nontaxable Exchanges

Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.

Butch sells land with an adjusted basis of $88,000 and a fair market value of $160,000 to Cynthia,his wife,for $160,000.Discuss how the tax consequences would differ if Butch and Cynthia had never been married.

Under the taxpayer-use test for a § 1033 involuntary conversion,the taxpayer has less flexibility in qualifying replacement property than under the functional-use test.

Maud exchanges a rental house at the beach with an adjusted basis of $475,000 and a fair market value of $460,000 for a rental house at the mountains with a fair market value of $400,000 and cash of $60,000.What is the recognized gain or loss?

The exchange of unimproved real property located in Topeka (KS)for improved real property located in Atlanta (GA)does not qualify as a like-kind exchange.

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

Which of the following types of transactions qualify for nonrecognition treatment?

Brett owns investment land located in Tucson,Arizona.He exchanges it for other investment land.In which of the following locations may the other investment land be located and enable Brett to qualify for § 1031 like-kind exchange treatment?

To qualify as a like-kind exchange,real property must be exchanged either for other real property or for personal property with a statutory life of at least 39 years.

Larry,who lived in Maine,acquired a personal residence eight years ago when he was 42 years old.During this period he has occupied the residence for only nine months (out of 12)each year due to winter vacations in Florida.Is Larry eligible for exclusion of gain under § 121?

Sammy exchanges equipment used in his business in a like-kind exchange.The property exchanged is as follows: The other party assumes the liability.

In determining the basis of like-kind property received,postponed losses are:

Which of the following exchanges qualifies for nonrecognition treatment as a § 1031 like-kind exchange?

The nonrecognition of gains and losses under § 1031 is mandatory for gains and elective for losses.

What types of exchanges of insurance contracts are eligible for nonrecognition treatment under § 1035?

Section 1033 (nonrecognition of gain from an involuntary conversion)applies to both gains and losses.