Question 1

B exchanges investment land with an adjusted basis of $40,000 for another parcel of investment land with a fair market value of $50,000 plus $12,000 in cash.What is B's recognized gain on this exchange?

Accepted Answer

A)  $12,000
B)  $20,000
C)  $22,000
D)  No gain is recognized.

Question 2

Which of the following is not true of like-kind exchange treatment?

Accepted Answer

A)  It is mandatory.
B)  It applies to losses as well as gains.
C)  Liabilities discharged generally are treated as boot received.
D)  It applies to exchanges of inventory.

Question 3

K currently owns two residences.She lived in the first from January 1, 20X1 until June 30, 20X4.She lived in the second from July 1, 20X4 until June 30, 20X6.Both residences have been owned since January 1, 20X1 and were either rented or vacant when not occupied by K.K can sell both residences on June 30, 20X6 and exclude her entire gain.

Accepted Answer

A) True 
 B)False

Question 4

Bonds and debentures do not qualify for like-kind exchange treatment.

Accepted Answer

A) True 
 B)False

Question 5

U.S.currency is always considered boot in a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not true of principal residences?

Accepted Answer

A)  "Principal residence" can refer only to property which the taxpayer owns.
B)  A taxpayer cannot occupy two principal residences at the same time.
C)  If a taxpayer rents out his or her former principal residence while trying to sell it, it may still qualify as the taxpayer's principal residence for purposes of § 121.
D)  A taxpayer can exclude gain only on the sale of one property every two years.

Question 7

G exchanged a rent house for another specified rent house to be received five months later.This qualifies as a like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not true of like-kind exchanges of real property?

Accepted Answer

A)  Improved real estate is not considered a like-kind exchange for unimproved real estate.
B)  A lease on real property with a remaining term of at least 30 years is treated as real property in a like-kind exchange.
C)  Condemned real estate in an involuntary conversion is treated under the like-kind rules.
D)  Real property in a like-kind exchange need not be of the same class.

Question 9

Involuntary conversion treatment under § 1033 applies to gains and losses.

Accepted Answer

A) True 
 B)False

Question 10

A gain may be deferred on the exchange of a life insurance contract for

Accepted Answer

A)  Another life insurance policy.
B)  Certain annuity contracts.
C)  Certain endowment contracts.
D)  All of the above.

Question 11

M traded in her business computer at a local dealer.Her cost in the old machine was $3,500 and her basis was $1,470.She paid $1,500 cash in the trade for a computer worth $4,000.How much is M's recognized gain or loss, and what is her basis in the new computer, respectively?

Accepted Answer

A)  $0 and $1,470
B)  $0 and $2,970
C)  $1,030 and $4,000
D)  $530 and $3,500

Question 12

Which of the following is not necessarily true of the replacement property in an involuntary conversion?

Accepted Answer

A)  The replacement property must be purchased within two years of the conversion.
B)  If the converted property is real estate used by the taxpayer, the replacement property must serve the same basic function as the converted property.
C)  For condemned real property used in a business, broader groups of replacement properties and a longer reinvestment period (an additional year)  are allowed.
D)  The replacement property may not have been owned by the taxpayer prior to the conversion or the threat of condemnation.

Exam 15: Nontaxable Exchanges

U.S.currency is always considered boot in a like-kind exchange.

Correct Answer
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Which of the following is not necessarily true of the replacement property in an involuntary conversion?

Correct Answer
verified

Bonds and debentures do not qualify for like-kind exchange treatment.

Correct Answer
verified

A gain may be deferred on the exchange of a life insurance contract for

Correct Answer
verified

Involuntary conversion treatment under § 1033 applies to gains and losses.

Correct Answer
verified

Which of the following is not true of like-kind exchange treatment?

Correct Answer
verified

B exchanges investment land with an adjusted basis of $40,000 for another parcel of investment land with a fair market value of $50,000 plus $12,000 in cash.What is B's recognized gain on this exchange?

Correct Answer
verified

Which of the following is not true of like-kind exchanges of real property?

Correct Answer
verified

Correct Answer
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G exchanged a rent house for another specified rent house to be received five months later.This qualifies as a like-kind exchange.

Correct Answer
verified

M traded in her business computer at a local dealer.Her cost in the old machine was $3,500 and her basis was $1,470.She paid $1,500 cash in the trade for a computer worth $4,000.How much is M's recognized gain or loss, and what is her basis in the new computer, respectively?

Correct Answer
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Which of the following is not true of principal residences?

Correct Answer
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Exam 15: Nontaxable Exchanges

U.S.currency is always considered boot in a like-kind exchange.

Correct AnswerverifiedShow Answer

Which of the following is not necessarily true of the replacement property in an involuntary conversion?

Correct AnswerverifiedShow Answer

Bonds and debentures do not qualify for like-kind exchange treatment.

Correct AnswerverifiedShow Answer

A gain may be deferred on the exchange of a life insurance contract for

Correct AnswerverifiedShow Answer

Involuntary conversion treatment under § 1033 applies to gains and losses.

Correct AnswerverifiedShow Answer

Which of the following is not true of like-kind exchange treatment?

Correct AnswerverifiedShow Answer

B exchanges investment land with an adjusted basis of $40,000 for another parcel of investment land with a fair market value of $50,000 plus $12,000 in cash.What is B's recognized gain on this exchange?

Correct AnswerverifiedShow Answer

Which of the following is not true of like-kind exchanges of real property?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

G exchanged a rent house for another specified rent house to be received five months later.This qualifies as a like-kind exchange.

Correct AnswerverifiedShow Answer

M traded in her business computer at a local dealer.Her cost in the old machine was $3,500 and her basis was $1,470.She paid $1,500 cash in the trade for a computer worth $4,000.How much is M's recognized gain or loss, and what is her basis in the new computer, respectively?

Correct AnswerverifiedShow Answer

Which of the following is not true of principal residences?

Correct AnswerverifiedShow Answer

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