FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Essay

Review LaterAdd Note

Review Later

Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.

Correct Answer

verified

One technique to avoid a wash ...

View Answer

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Ralph gives his daughter, Angela, stock (basis of $8,000; fair market value of $6,000) . No gift tax results. If Angela subsequently sells the stock for $10,000, what is her recognized gain or loss?

A) $0
B) $2,000
C) $4,000
D) $10,000
E) None of the above

F) C) and D)
G) A) and E)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

The basis of personal use property converted to business use is:

In a nontaxable exchange, the replacement property is assigned a carryover basis if there is a realized gain, but receives a new basis if there is a realized loss.

Melvin receives stock as a gift from his uncle. No gift tax is paid. The adjusted basis of the stock is $30,000 and the fair market value is $38,000. Melvin trades the stock for bonds with a fair market value of $35,000 and $3,000 cash. What is his recognized gain and the basis for the bonds?

What requirements must be satisfied to receive nontaxable exchange treatment under § 1031?

Nontaxable stock dividends result in:

Pedro borrowed $250,000 to purchase a machine costing $300,000. He later borrowed an additional $25,000 using the machine as collateral. Both notes are nonrecourse. Eight years later, the machine has an adjusted basis of zero and two outstanding note balances of $145,000 and $18,000. Pedro sells the machine subject to the two liabilities for $45,000. What is his realized gain or loss?

Sammy exchanges equipment used in his business in a like-kind exchange. The property exchanged is as follows: The other party assumes the liability. a.​What is Sammy's recognized gain or loss? b.What is Sammy's basis for the assets he received?

Livestock of different sexes can qualify for like-kind exchange treatment if the livestock has been held for over 24 months.

Helen purchases a $10,000 corporate bond at a premium of $1,000 and elects to amortize the premium. On the later sale of the bond for $10,800, she has amortized $300 of the premium. Helen has a recognized gain of $800 ($10,800 amount realized - $10,000 adjusted basis).

The maximum amount of the § 121 gain exclusion on sale of a principal residence is $250,000 for a single individual and $500,000 for a married couple.

The holding period for nontaxable stock dividends that are the same type (i.e., common on common) includes the holding period of the original shares, but the holding period for nontaxable stock dividends that are not the same type (i.e., preferred on common) is new and begins on the date the dividend is received.

Sandra's automobile, which is used exclusively in her trade or business, was damaged in an accident. The adjusted basis prior to the accident was $11,000. The fair market value before the accident was $10,000 and the fair market value after the accident is $6,000. Insurance proceeds of $3,200 are received. What is Sandra's adjusted basis for the automobile after the casualty?

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) ?

Ramon sells land with an adjusted basis of $120,000 and a fair market value of $175,000 to Pauline, his wife, for $175,000. Discuss how the tax consequences would differ if Ramon and Pauline had never been married.

Which of the following might motivate a taxpayer to try to avoid like-kind exchange treatment?

To qualify for the § 121 exclusion, the property must have been used by the taxpayer for the 5 years preceding the date of sale and owned by the taxpayer as the principal residence for the last 2 of those years.

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

The amount realized does not include any amount received by the taxpayer that is designated as severance damages by both the government and the taxpayer.