Outline_9_students_Section_1031 - OUTLINE 9 CHAPTER 15...

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OUTLINE 9 CHAPTER 15 NONTAXABLE EXCHANGES May 2, 2011 Reading assignment: Chapter 15 pages 2 – 10 and Section 15.6 Ex 1 Ex 2 Ex 3 Ex 4 Ex 5 Ex 6 Ex 7 PROPERTY RECEIVED Cash Fmv of boot received Mortgage discharged on property given up Like-kind property received EQUALS Amount Realized PROPERTY GIVEN UP Adjusted basis of like-kind property given Basis of boot given Mortgage assumed on property received Adjusted basis Realized Gain or Loss Less Recognized gain or loss =Deferred Gain or loss Basis of New Property Received FMV of property received Less deferred gain Or plus deferred loss EQUALS Basis of like-kind 0property received ALTERNATIVELY 1
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Plus basis of boot give Plus gain recognized Plus Mortgage assumed Less Mortgage relieved Less FMV of boot received EQUALS Basis of like-kind property received Basis of boot received = FMV of boot LIKE KIND EXCHANGES 1) Taxable Exchanges a) Gain or loss is recognized 2) Nontaxable Exchange a) Mere change in form b) No wherewithal to pay c) General rule i) Gains and losses are deferred (1) Except when boot is received d) Mandatory not elective 3) Like-kind Property. a) Property exchanged must be like-kind property held for Productive Use or Investment. (a) Investment for investment (b) Investment for business (c) Business for business (d) One cannot exchange property used for personal use (2) Example 1: Eric owns an apartment building held for investment. Eric exchanges the building for farmland to be used in his trade or business. Does the exchange qualify as a like-kind exchange? (3) Eric exchanges a vacation home in Hawaii for a vacation home in Palm Springs. b)
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This note was uploaded on 11/07/2011 for the course ACCT 508 taught by Professor Frankel during the Spring '10 term at S.F. State.

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Outline_9_students_Section_1031 - OUTLINE 9 CHAPTER 15...

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