Question 1

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?
?
$\begin{array}{llcc}
  \text { Realized } &  \text {   Recognized} \
\end{array}$
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 $

Accepted Answer

The answer of Donald and Candice sell their home for...

Question 2

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?

Accepted Answer

A) No gain or loss 
B) $3,000 gain 
C) $3,000 loss 
D) $8,000 gain 
E) $5,000 loss

Question 3

Match each statement with the correct term below.
-Boot

Accepted Answer

A) Losses are never deferred. 
B) Must be real property used for business or as a investment. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 4

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?

Accepted Answer

A) $- 0 - 
B) $1,000 
C) $2,000 
D) $3,000 
E) $5,000

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

A) $160,000 
B) $170,000 
C) $190,000 
D) $200,000 
E) $210,000

Question 7

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

Accepted Answer

A) Partnership interests. 
B) Convertible debentures. 
C) Mortgage notes 
D) Rental real estate located in different states. 
E) Common stock of companies in the same industry.

Question 8

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?
?
$\begin{array}{llcc}
  \text { Realized } &  \text {   Recognized} \
\end{array}$
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- $

Accepted Answer

The answer of Charlotte purchases a residence for $105,000 on...

Question 9

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

Accepted Answer

A) Losses are never deferred. 
B) Must be real property used for business or as a investment. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 10

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

Accepted Answer

A) Losses are never deferred. 
B) Must be real property used for business or as a investment. 
C) Not considered like-kind property. 
D) A taxpayer can have only one at a time. 
E) The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.
G)The concept upon which the ability to defer gains on certain nontaxable transactions relies.

Question 11

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?

Accepted Answer

A) $- 0 - 
B) $1,000 
C) $2,000 
D) $3,000 
E) $5,000

Question 12

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

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 13

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.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 14

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.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 15

Which of the following qualify as a like-kind exchange?
-Land in London, England for land in San Francisco, California.

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 16

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

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 17

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

Accepted Answer

A) qualifies as a like-kind exchange 
B) does not qualify as a like-kind exchange

Question 18

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?

Accepted Answer

The answer of A fire destroys David's business building that...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 12: Non-Recognition Transactions

Match each statement with the correct term below. -Boot

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

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

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

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.

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.

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