Practice Exam 2 - Tax 4001 Fall 2010 Judd Exam 2 Practice...

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Tax 4001 Fall 2010 Judd Exam 2 Practice Problems, Property Transactions 1. For each of the following transactions, identify how much gain the taxpayer will recognize and the taxpayer’s basis in the new property. a. Maude exchanges computer equipment with a basis of $25,000 and a FMV of $45,000, for computer equipment with a FMV of $37,000 and a motorcycle with a FMV of $8,000. Maude’s Recognized Gain _________________________________________ Maude’s basis in new computer equipment ___________________________ Maude’s basis in motorcycle _______________________________________ b.Cane Corporation’s warehouse is destroyed by a hurricane in September, 2009, when its basis is $130,000, and its FMV is $180,000. The insurance company reimburses Cane $180,000. In December, 2009, Cane Corporation purchases a new warehouse for $140,000. Cane’s Recognized Gain ___________________________________________ Cane’s Basis in new warehouse _____________________________________ 2. White Corporation’s first disposition of a Section 1231 Asset occurred in 2005. Fill in the table below to indicate the character of White’s Net 1231 Gain/(losses) for the period 2005-2009. Year Sec 1231 Gains Sec 1231 Losses Ordinary Income (loss) Capital Gain (loss) 2005 $10,000 $8,000 2006 $10,000 $15,000 2007 $6,000 $5,000 2008 $9,000 $3,000 2009 $2,000 $8,000
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3. Taxpayer exchanges an apartment building with an adjusted basis of $47,000 and a FMV of $55,000,
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