Chapter 15 Class Questions 2011

Chapter 15 Class Questions 2011 - Bob Ryan DePaul...

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DePaul University Class Questions Accounting 380 Tax Treatment of Individuals and Property Transactions Chapter 15 – Property Transactions: Non Taxable Exchanges True/False 3. In a nontaxable exchange, recognition is postponed. In a tax-free transaction, nonrecognition is permanent. 6. Stocks and bonds held for investment purposes qualify under the like-kind exchange provision. 9. The exchange of unimproved real property located in Topeka (KS) for improved real property located in Atlanta (GA) qualifies as a like-kind exchange. 14. An exchange of two items of personal property (personalty) that belong to different general business asset classes qualifies for nonrecognition under § 1031 as long as both properties are used in the taxpayer’s trade or business. 17. If boot in the form of cash is given in a § 1031 like-kind exchange, the realized gain is not recognized. 22. If boot is received in a § 1031 like-kind exchange that results in some of the realized gain being recognized, the holding period for both the like-kind property and the boot received begins on the date of the exchange. 26. The requirements for replacement property in involuntary conversions are generally less restrictive than the requirements in like-kind exchanges. 31. If a taxpayer reinvests the net proceeds (amount received – related expenses) received in an involuntary conversion in qualifying replacement property within the statutory time period, the realized gain cannot be recognized. 41. A taxpayer who sells his or her principal residence at a realized loss can elect to recognize the loss even if a qualified residence is acquired during the statutory time period. 44. The maximum amount for the § 121 exclusion (exclusion of gain on sale of principal residence) that can reduce taxable income for an unmarried taxpayer is $250,000 and for a married taxpayer is $500,000. 47. Quela, who is single, sells her principal residence which she has owned and occupied for 8 years. Prior to the sale, she made certain repairs to the house. In addition, she incurred realtor’s commissions and attorney fees associated with the sale. Quela can reduce the amount realized by the cost of the repairs, the realtor’s commission, and the attorney’s fee. Multiple Choice
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This note was uploaded on 01/27/2012 for the course ACC 548 taught by Professor Ryan during the Spring '11 term at DePaul.

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Chapter 15 Class Questions 2011 - Bob Ryan DePaul...

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