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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 ยง 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.