Question 1

Tariq sold certain U.S.Government bonds and State of Oregon bonds at a loss to offset short-term capital gain from a previous transaction.He felt that the U.S.Government and State of Oregon bonds were "good" investments, so he repurchased identical securities within one week.Do these transactions constitute wash sales?

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Question 2

Mitchell owned an SUV that he had purchased two years ago for $48,000 and which he transfers to his sole proprietorship.How is the sole proprietorship's basis for the SUV calculated? What additional information does Mitchell need?

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Question 3

Define an involuntary conversion.

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Question 4

What is the easiest way for a taxpayer who is going to sell property that has declined in value to avoid the § 267 loss disallowance provision?

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Question 5

Discuss the relationship between the postponement of realized gain under § 1031 (like-kind exchanges) and the adjusted basis and holding period for the replacement property.

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Question 6

Can related parties take advantage of the like-kind exchange provisions?

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Question 7

What kinds of property do not qualify under the like-kind provisions?

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Question 8

Discuss the treatment of losses from involuntary conversions.

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Question 9

To be eligible to elect postponement of gain treatment for an involuntary conversion, what are the three tests for qualifying replacement property?

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Question 10

Under what circumstance is there recognition of some or all of the realized gain associated with the giving of boot by the taxpayer in a like-kind exchange?

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Question 11

Explain how the sale of investment property at a loss to a brother is treated differently from a sale to a nephew.

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Question 12

What requirements must be satisfied to receive nontaxable exchange treatment under § 1031?

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Question 13

Discuss the treatment of realized gains from involuntary conversions.

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Question 14

Alice is terminally ill and does not expect to live much longer.Pondering the consequences of her estate, she decides how to allocate her property to her nieces.She makes a gift of depreciated property (i.e., adjusted basis exceeds fair market value) to Marsha, a gift of appreciated property (i.e., fair market value exceeds adjusted basis) to Jan, and leaves appreciated property to Cindy in her will.Each of the properties has the same fair market value.From an income tax perspective, which niece is her favorite?

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Question 15

What effect do the assumption of liabilities have on a § 1031 like-kind exchange?

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Question 16

Identify two tax planning techniques that can be used to avoid the wash sale disallowance of loss.

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Question 17

For disallowed losses on related-party transactions, who has the right of offset?

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Question 18

Why is it generally undesirable to pass property by death when its fair market value is less than basis?

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Question 19

Discuss the relationship between realized gain and boot received in a § 1031 like-kind exchange.

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Question 20

Discuss the logic for mandatory deferral of realized gain or loss for a § 1031 like-kind exchange.

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Quiz 13: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2