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Week9 Tina Lu.pdf - Problems 12-25 Exchanges qualify as...

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Problems 12-25 Exchanges qualify as like-kind exchanges: b. c. f Problems 12-30 Helmut’s realized gain= (700k+180k)-(600k+100k)= 250k Boots received by Helmut= 180k-100k= 80k ∴Helmut’s recognized gain= lesser of realized gain or boots received= $80,000 ∴Basis of the new farm= $600,000 Problems 12-38 a.Recognized gain: $30,000 *$30,000 gain may not be deferred since Federal fails to reinvest all the $800,000 insurance proceeds in a warehouse replacement property. b.All gain of $300,000 may be deferred since all the insurance proceeds are reinvested in purchasing control of a corporation that owns a qualified replacement property. c.Since Federal did not reinvest in the qualified replacement property, Federal must recognized the gain of $300,000.
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Unformatted text preview:d. Since proceeds from the conversion must be reinvested within 2 years after the close of the tax year that gain was realized. Federal purchases a warehouses on March 26, 2021 which is longer than the maximum holding period; hence, the recognized gain is $300,000. Helmut Heidi property adjusted basis/FMV 600,000 770,000 liability subjected 180,000 100,000 Basis of property exchanged 600,000- Boot received80,000- + Gain recognized 80,000- Loss recognized- Basis of property received600,000 AD for the warehouse destroyed 500,000 Insurance proceed 800,000 Realized gain 300,000 2018/9/3insurance proceed 800,000 warehouse purchased 770,000 gain recognized* 30,000 2018/10/23