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CHAPTER 15--PROPERTY TRANSACTIONS: NONTAXABLE EXCHANGES Student: ___________________________________________________________________________ 1. Gains and losses on nontaxable exchanges are deferred because the tax law recognizes that nontaxable exchanges result in a change in the form but not the substance of the taxpayer’s relative economic position. True False 2. One of the justifications for nontaxable exchange treatment is that the taxpayer lacks the wherewithal to pay. True False 3. In a nontaxable exchange, recognition is postponed. In a tax-free transaction, nonrecognition is permanent. True False 4. In a nontaxable exchange, the replacement property is assigned a carryover basis. True False 5. A taxpayer can recognize a realized loss on a § 1031 like-kind exchange. True False 6. Stocks and bonds held for investment purposes qualify under the like-kind exchange provision. True False 7. Livestock of different sexes cannot qualify for like-kind exchange treatment even if the livestock has been held for over one year. True False 8. To qualify as a like-kind exchange, real property must be exchanged either for other real property or for personal property with a statutory life of at least 39 years. True False 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. True False 10. Jena owns land as an investor. She exchanges the land for a warehouse in which she will store the inventory of her business. The exchange does not qualify for like-kind exchange treatment. True False 1
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11. A building located in Virginia (used in business) exchanged for a building located in France (used in business) cannot qualify for like-kind exchange treatment. True False 12. The exchange of personal use property whose holding period is long-term for other personal use property (e.g., trade-in of personal use automobiles) can qualify as like-kind property if the personal use property received is held long term. True False 13. An exchange of business or investment property for like-kind property with a § 267 related party can qualify as a § 1031 like-kind exchange. True False 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. True False 15. In a like-kind exchange involving boot, the ceiling on recognized gain is the lower of realized gain or boot received. True False 16. Shari exchanges an office building in New Orleans (adjusted basis of $700,000) for an apartment building in Baton Rouge (fair market value of $900,000). In addition, she receives $100,000 of cash.
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This note was uploaded on 03/21/2012 for the course ACCT 442 taught by Professor Honig during the Spring '12 term at CUNY Lehman.

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