Tax accounting quiz 10

Camilo's property, with an adjusted basis of $155,000, is condemned by the state. Camilo receives property with a fair market value of $180,000 as compensation for the property taken. Camilo's realized gain is $_______________ and his recognized gain is $_______________. The basis of the replacement property is $ ____________________

- $25,000 - $0 - $155,000

Constanza, who is single, sells her current personal residence (adjusted basis of $165,000) for $450,000. She has owned and lived in the house for 30 years. Her selling expenses are $22,500. Constanza's realized gain is $ ________________ and her recognized gain would be $________________

- $262,500 - $12,500

Mandy and Timothy exchange land in a like-kind exchange. Mandy receives land with a fair market value of $28,000 and transfers land worth $20,000 (adjusted basis of $14,000) and cash of $8,000. Mandy's realized gain is $ _______________ and her recognized gain is $________________

- $6,000 - $0

Luana sells Beta Corporation stock with an adjusted basis of $58,000 and a fair market value of $70,000 for $64,000. Luana has a realized _____________________ of $ ______________________

- Gain - $6,000

Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $85,000) is worth $100,000 and Johnathan's land has a fair market value of $80,000, Johnathan also gives Logan cash of $20,000. a. Logan's recognized gain is $____________________ b. Assume that Johnathan's land is worth $90,000 and he gives Logan $10,000 cash. Logan's recognized gain is $_______________

A. $15,000 B. $10,000

Indicate whether the following statements are "True" or "False" regarding the involuntary conversion of property. a. If a loss occurs on an involuntary conversion, it is postponed and not recognized. b. Postponement of realized gain is permitted to the extent that the taxpayer reinvests the amount realized from the conversion in replacement property. c. The amount realized from an involuntary conversion is normally any insurance proceeds received.

A. False B. True C. True

Indicate whether the following exchanges qualify as nontaxable exchanges of like-kind property under Section 1031. Select "Qualifies" or "Does not qualify", whichever is applicable. a. A warehouse located in the United States exchanged for a warehouse in Greece. b. A machine used in a business exchanged for an office building. c. Business equipment exchanged for office furniture. d. Unimproved land, held for investment, exchanged for an apartment building. e. A personal residence exchanged for a store building.

A. does not qualify B. does not qualify (property can be exchanged only for other property. property includes principally machines, equipment, trucks, automobiles, furniture, and fixtures. The office building is real estate.) C. does not qualify D. qualifies E. does not qualify

Juliana purchased land in 2019 for $50,000. She gave the land to Tom, her brother, in 2022, when the fair market value was $70,000. No gift tax is paid on the transfer. Tom subsequently sells the property for $63,000. a. Tom's basis in the land is $_________________ and he has a realized _______________ of $ __________________ b. Assume, instead, that the land has a fair market value of $45,000 and that Tom sold the land for $43,000. Tom's basis in the land is $ _______________ and he has a realized __________________ of $ _______________________

a. $50,000, gain, $13,000 b. $45,000, loss, ($2,000)

Alice gifted stock to her son, Bob, in year 5. Alice bought the stock in year 1 for $8,300. The value of the stock on the date of gift was $6,400. Bob sold the stock in year 7 for $15,800. What is Bob's recognized gain or loss on the sale in year 7? a.$0 b.$7,500 gain c.$9,400 gain d.$15,800 gain

b

On January 25, year 10, Mother Hall gave her daughter, Nadyne, 500 shares of common stock of XYZ, Corp. The fair market value of the stock on January 25 was $2,000. Mother Hall had paid $4,000 for the stock three years earlier. Nadyne decided a month after receiving the stock that she doesn't want to hold it and sold it for $1,000, the fair market value at the time of the sale. How much income (loss) must Nadyne include in her tax return for year 10 in regards to the sale of the stock? a.$0 b.($1,000) c.($2,000) d.($3,000)

b