Area IV: Property Transactions

A taxpayer exchanges a business building (Adjusted Basis $100,000, FMV $200,000) for a new business building (FMV $180,000) and $20,000 cash. What is the recognized gain and the basis of the new building?

A business sells a machine for $50,000. The machine was purchased for $40,000 and had accumulated depreciation of $15,000 (Adjusted Basis = $25,000). What is the character of the gain?

In Year 1, a taxpayer has a net §1231 gain of $20,000. In the previous five years, the taxpayer had the following net §1231 results: Year -1: $0; Year -2: $5,000 Loss; Year -3: $3,000 Loss; Year -4: $0; Year -5: $0. All losses were fully deducted as ordinary losses. How is the Year 1 gain taxed?

A taxpayer sells property to their adult child for $40,000. The taxpayer's basis was $60,000. Two years later, the child sells the property to an unrelated party for $70,000. What is the child's recognized gain on the second sale?

A taxpayer sells a rental property for $200,000 in Year 1. The basis was $120,000. The buyer pays $50,000 in Year 1 and will pay the remaining $150,000 in Year 2 with interest. What is the recognized gain in Year 1 using the installment method?

A taxpayer holds Qualified Small Business Stock (QSBS) under §1202 acquired in Year 1 (after 2010). They sell it in Year 7 for a gain of $2 million. They have no other capital gains. What is the federal income tax on this gain?

A taxpayer sells §1245 property (machine) on the installment method. Sale Price: $100,000. Basis: $60,000. Depreciation Recapture (Ordinary): $20,000. §1231 Gain: $20,000. Cash received in Year 1: $10,000. How is the gain reported in Year 1?

A taxpayer has a Net Capital Loss of $10,000 in Year 1. They have taxable income of $50,000. How much of the loss can be deducted in Year 1, and what happens to the remainder?

A taxpayer sells a building (Section 1250 property) for a gain of $100,000. They used straight-line depreciation of $40,000. The taxpayer is in the 37% ordinary bracket and 20% capital gains bracket. How is the gain taxed?

A taxpayer exchanges a warehouse (Basis $100,000, FMV $200,000) for a new warehouse (FMV $150,000) and cash of $50,000. They incur $10,000 in closing costs. What is the recognized gain?

A taxpayer sells stock to their brother for $5,000. The basis was $8,000. The brother sells the stock to an unrelated party for $4,000. What is the brother's recognized gain or loss?

A taxpayer sells their principal residence for a $600,000 gain. They are single and have lived there for 5 years. What is the taxable gain?

A taxpayer has the following capital gains and losses in Year 1:<br/>- Short-term capital gain: $5,000<br/>- Short-term capital loss: ($12,000)<br/>- Long-term capital gain (15% rate): $10,000<br/>- Long-term capital loss (28% rate group): ($2,000)<br/>What is the net capital gain/loss position?

In a like-kind exchange, Taxpayer gives up Real Estate (Basis $50,000, FMV $100,000) and receives Real Estate (FMV $90,000) plus $10,000 Cash. What is the recognized gain and the basis of the new property?

Taxpayer exchanges a building (FMV $500,000, Basis $200,000, Mortgage $100,000) for a new building (FMV $400,000). The other party assumes the $100,000 mortgage. What is the recognized gain?

A warehouse (Basis $200,000) is destroyed by fire. Insurance pays $300,000. The taxpayer purchases a replacement warehouse for $280,000 within the replacement period. What is the recognized gain?

In Year 5, a taxpayer has a §1231 gain of $20,000. In Year 1, they had a §1231 loss of $8,000 that was deducted as ordinary. No other §1231 transactions occurred in Years 2-4. How is the Year 5 gain characterized?

Taxpayer sells a machine used in business for $12,000. Original cost was $10,000. Accumulated depreciation was $6,000 (Adjusted Basis $4,000). What is the character of the gain?

Individual taxpayer sells an office building (held > 1 year) for $500,000. Original cost $400,000. Accumulated straight-line depreciation $100,000. Adjusted Basis $300,000. Total Gain $200,000. How is the gain taxed?

Taxpayer sells land (Basis $60,000) for $100,000. Terms: $20,000 cash in Year 1, and an $80,000 note payable in Year 2. What is the recognized gain in Year 1 under the installment method?

A taxpayer sells stock (Basis $50,000) to their sister for $30,000 (FMV). The sister later sells the stock to an unrelated party for $55,000. What is the sister's recognized gain?

A cash-basis taxpayer loans $100,000 to their 100% owned accrual-basis corporation. The note requires interest to be paid annually. The corporation accrues the interest expense in Year 1 but does not pay it until Year 2. When can the corporation deduct the interest?

A single taxpayer sells §1244 small business stock for a loss of $60,000. They have no other capital transactions. How is the loss treated?

A single taxpayer sells their principal residence for a $400,000 gain. They lived in the home for 18 months due to a job transfer (a qualified unforeseen circumstance). The maximum exclusion is normally $250,000. What is the exclusion amount allowed?

A taxpayer exchanges an office building (Basis $200,000, FMV $500,000) for a warehouse (FMV $450,000) and $50,000 cash. What is the recognized gain and the basis of the warehouse?

A factory is destroyed by fire. Adjusted basis was $400,000. Insurance proceeds were $600,000. The taxpayer purchases a replacement factory for $550,000 within the replacement period. What is the recognized gain?

A taxpayer sells a business truck (Section 1245 property) for $30,000. Original cost was $50,000. Accumulated depreciation was $35,000. Adjusted basis was $15,000. What is the character of the gain?

A taxpayer sells an office building (Section 1250 property) for $600,000. Original cost $500,000. Straight-line depreciation taken $100,000. Adjusted basis $400,000. The taxpayer is an individual in the 37% bracket. What is the tax treatment of the $200,000 gain?

A taxpayer has a net §1231 gain of $50,000 in Year 5. In Year 1, they had a net §1231 loss of $12,000 which was deducted as ordinary. Years 2-4 had no §1231 transactions. How is the Year 5 gain taxed?

An individual (single) sells Section 1244 small business stock for a loss of $70,000. They have no capital gains. What is the tax treatment of the loss?

A taxpayer sells land (Basis $60,000) for $100,000 in Year 1. They receive $20,000 in Year 1 and a note for $80,000 payable in Year 2. They use the installment method. What is the recognized gain in Year 1?

A taxpayer sells a rental house to their adult child. Basis $200,000, FMV $150,000. The child later sells the house to an unrelated party for $180,000. What is the child's recognized gain or loss?

Corporation A owns 60% of Corporation B. Individual X owns 40% of Corporation A. Does Individual X constructively own stock in Corporation B?

An accrual basis corporation owes $10,000 bonus to its cash basis shareholder (who owns 60% of the stock). The bonus is accrued in Year 1 but paid in Year 2. When can the corporation deduct the bonus?

A taxpayer sells a building to a partnership in which they own 60% of the capital interest. The building (Basis $100,000) is sold for $80,000. What is the recognized loss?

A taxpayer exchanges a warehouse used in business (Basis $200,000, FMV $300,000) for an apartment building (FMV $280,000) and $20,000 cash. What is the realized gain, recognized gain, and basis in the new property?

A taxpayer sells a machine used in business for $50,000. The machine was purchased for $60,000 and has accumulated depreciation of $25,000. What is the amount and character of the gain or loss?

A taxpayer sells an office building (real property) for $500,000. Original cost was $400,000. Accumulated straight-line depreciation is $100,000. Adjusted basis is $300,000. The taxpayer is in the 37% ordinary bracket and 20% capital gains bracket. What is the tax treatment of the $200,000 gain?

A taxpayer sells property to their adult child for $40,000. The property had an adjusted basis of $60,000. Two years later, the child sells the property to an unrelated party for $70,000. What is the child's recognized gain on the second sale?

A taxpayer holds §1244 small business stock purchased for $200,000. The taxpayer is single. The stock becomes worthless in Year 1. What is the character of the loss?

A taxpayer sells property for $100,000 in Year 1. The adjusted basis was $40,000. The buyer pays $20,000 in Year 1 and agrees to pay $20,000 per year for the next 4 years plus interest. What is the recognized gain in Year 1 under the installment method?

A taxpayer has a short-term capital loss of $10,000 and a long-term capital gain of $4,000 in Year 1. The taxpayer also has $60,000 of ordinary income. What is the taxpayer's AGI for Year 1?

A taxpayer sells stock to their brother for $5,000. The taxpayer's basis was $8,000. The brother subsequently sells the stock to an unrelated party for $4,000. What is the brother's recognized gain or loss?

A taxpayer owns a rental house. In Year 1, the house is destroyed by fire. Adjusted basis was $100,000. Insurance proceeds were $150,000. The taxpayer purchases a replacement rental house for $140,000 in Year 2. What is the recognized gain?

A taxpayer has a net §1231 gain of $20,000 in Year 5. In Years 1-4, the taxpayer had net §1231 losses of $8,000 (Year 1) and $4,000 (Year 2), which were deducted as ordinary losses. What is the character of the Year 5 gain?

A taxpayer sells their principal residence for a $400,000 gain. They are single and lived in the home for 18 months due to a job change (qualified unforeseen circumstance). The maximum exclusion is $250,000. What is the exclusion amount?