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taxch7 - CHAPTER 7 PROPERTY TRANSACTIONS BASIS GAIN AND...

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CHAPTER 7 PROPERTY TRANSACTIONS: BASIS, GAIN AND LOSS, AND NONTAXABLE EXCHANGES SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Amount realized and basis determination Unchanged 1 2 Basis and cost recovery Modified 2 3 Personal use asset sale and exchange Unchanged 3 4 Recognition and condemnation Modified 4 5 Issue recognition Unchanged 5 6 Basis and cost identification Unchanged 6 7 Allocation of purchase price to goodwill New 8 Gift basis Unchanged 8 9 Ethics problem Unchanged 9 10 Gift basis Unchanged 10 11 Gift basis and effect of gift tax New 12 Issue recognition Modified 12 13 Gift basis Unchanged 13 14 Alternate valuation date for inherited property Unchanged 14 15 Alternate valuation date for inherited property Unchanged 15 16 Related party loss disallowance Unchanged 16 17 Wash sales New 18 Property converted from personal use Unchanged 18 19 Property converted from personal use Modified 19 20 Like-kind exchange: recognition and basis Unchanged 20 21 Like-kind exchange: related party Unchanged 21 22 Like-kind exchange: like-kind property Unchanged 22 23 Like-kind exchange: boot received Modified 23 24 Issue recognition Unchanged 24 25 Like-kind exchange: basis Unchanged 25 26 Like-kind exchange: like-kind property Unchanged 26 27 Form of the transaction Unchanged 27 28 Like-kind exchange: boot given that has Unchanged 28 declined in value 7-1
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7-2 2003 Entities Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 29 Like-kind exchange and mortgage assumed Unchanged 29 30 Like-kind exchange: recognition, boot, and basis Unchanged 30 31 Like-kind exchange and mortgage assumed Unchanged 31 32 Involuntary conversion: qualifying replacement Modified 32 property 33 Ethics problem Modified 33 34 Involuntary conversion: recognition and basis Unchanged 34 35 Involuntary conversion: recognition and basis Modified 35 36 Involuntary conversion: recognition and basis Unchanged 36 37 Sale of residence: calculation and maximum Unchanged 37 § 121 exclusion 38 Transfer of property between spouses or incident Unchanged 38 to divorce Bridge Discipline Problem 1 Depreciation Unchanged 1 2 Depreciation Unchanged 2 3 Like-kind exchanges Modified 3 Research Problem 1 Stock sale identification Unchanged 1 2 § 1045 transactions Unchanged 2 3 Deferred like-kind exchange New 4 Internet activity Unchanged 4 5 Internet activity Unchanged 5 PROBLEM MATERIAL 1. a. Original basis of land $ 10,000 Original basis of house 70,000 Less: Depreciation ( 32,200 ) Adjusted basis of house and land $ 47,800 Original basis of tennis court $ 5,000 Less: Depreciation ( 1,300 ) Adjusted basis of tennis court $ 3,700 Amount realized $ 125,000 Less: Adjusted basis ($47,800 + $3,700) ( 51,500 ) Realized gain $ 73,500 b. Amount realized [$125,000 (cash) + $20,000 (mortgage)] $ 145,000 Less: Adjusted basis ( 51,500 ) Realized gain $ 93,500
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Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges 7-3 c. Same answer as in part (b.) above.
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