Gains and Losses and Taxpayer ExchangesTaxpayer exchanges a business use machine with an adjusted
basis of $22,000 and a fair market value of $30,000 for another business use
machine with a fair market value of $28,000 and $2,000 cash. What is thetaxpayer’s recognized gain?a. $0.b. $2,000.c. $6,000.d. $8,000.e. None of the above.Taxpayer exchanges a rental house at the beach with an
adjusted basis of $225,000 and a fair market value of $200,000 for a rental
house at the mountains with a fair market value of $180,000 and cash of
$20,000. Whatis the recognized gain or loss?a. $0.b. $20,000.c. ($20,000).d. ($25,000).e. None of the above.Melvin receives stock as a gift from his uncle. The adjusted
basis of the stock is $14,000 and the fair market value is $20,000. Melvin
trades the stock for bonds with a fair market value of $17,000 and $3,000 cash.What is his recognized gain and the basis for the bonds?a. $0, $11,000.b. $0, $17,000.c. $3,000, $14,000.d. $6,000, $17,000.e. None of the above.Nancy and Tonya exchanged assets. Nancy gave Tonya her
personal residence with an adjusted basis of $280,000 and a fair market value
of $560,000. The house has a mortgage of $200,000 which is assumed by Tonya.
Tonya gave Nancy a yacht used in her business with an adjusted basis of
$250,000 and a fair market value of $360,000. What is Tonya’s realized and
recognized gain?a. $310,000 realized and $310,000 recognized gain.b. $310,00 realized and $0 recognized gain.c. $110,000 realized and $110,000 recognized gain.d. $110,000 realized and $0 recognized gain.e. None of the above.An office building with an adjusted basis of $320,000 was
destroyed by fire on December 30, 2007. On January 11, 2008, the insurance
company paid the owner $450,000. The fair market value of the building was$500,000, but under the co-insurance clause, the insurance
company is responsible for only 90 percent of the loss. The owner reinvested
$410,000 in a new office building on February 12, 2008, that was smaller than
the original office building. What is the recognized gain and the basis of the
new building if § 1033 (nonrecognition of gain from an involuntary conversion)
is elected?a. $0 and $320,000.b. $0 and $410,000.c. $40,000 and $320,000.d. $130,000 and 410,000.
e. None of the above.
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