Question 1

Louis owns a condominium in New Orleans which has been his principal residence for 12 years.He wants to be near Lake Ponchartrain since he enjoys water activities.Therefore,he sells the condominium.His original intent was to purchase a house in New Orleans near the lake.However,the cost of such properties far exceeded his sales proceeds.He was able to purchase a house on the lake in Covington,which is located across the causeway.He invested all of his sales proceeds in the Covington house.After two months of commuting over an hour to and from work each day,he decides to rent an efficiency apartment in New Orleans near his office.He spends the weekends and vacations at his home in Covington.

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Question 2

Larry,who lived in Maine,acquired a personal residence eight years ago when he was 42 years old.During this period he has occupied the residence for only nine months (out of 12)each year due to winter vacations in Florida.Is Larry eligible for exclusion of gain under § 121?

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Question 3

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

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Question 4

Amy's manufacturing plant is destroyed by fire on the afternoon of October 25,2012.The adjusted basis is $550,000.The insurance company offers a settlement of $520,000.After protracted negotiations,Amy receives $575,000 on June 20,2013.Amy is a fiscal year taxpayer whose tax year ends on June 30th.What is the latest date that Amy can invest the proceeds in qualifying replacement property and elect to defer the gain under § 1033?

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Question 5

Discuss the treatment of realized gains from involuntary conversions.

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Question 6

Distinguish between a direct involuntary conversion and an indirect involuntary conversion.

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Question 7

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 8

What types of exchanges of insurance contracts are eligible for nonrecognition treatment under § 1035?

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Question 9

Under what circumstances may a partial § 121 exclusion be available even though the taxpayer has used the § 121 exclusion within the two-year period preceding the sale of the current residence?

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Question 10

Edward,age 52,leased a house for one year in Memphis with an option to buy as his personal residence.At the end of the lease,he purchased the house.He lived there for an additional 26 months before his employer transferred him to Tucson.Expecting to be in Tucson for 18 to 24 months,he rented the Memphis house for 18 months with an option to extend on a month to month basis for an additional 6 months.At the end of the 18-month period,Edward's employer offered him a permanent position in Tucson as branch manager.The tenant who had been occupying Edward's house in Memphis purchased it at the end of the 24-month extended lease period.Is Edward eligible to elect exclusion treatment under § 121?

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Question 11

Butch sells land with an adjusted basis of $88,000 and a fair market value of $160,000 to Cynthia,his wife,for $160,000.Discuss how the tax consequences would differ if Butch and Cynthia had never been married.

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Question 12

Melissa,age 58,marries Arnold,age 50,on June 1,2012.Melissa decides to sell her principal residence on August 1,2012,which she has owned and occupied for the past 30 years.Arnold has never owned a house.However,while he was married to Kelly who died 6 months prior to his marriage to Melissa,Kelly used the § 121 election on the sale of her residence in January 2010 to reduce her realized gain from $123,000 to $0.Kelly used the sales proceeds to pay off Arnold's gambling debts.Can Melissa elect the § 121 exclusion on the sale of her residence? What is the maximum § 121 exclusion available to Melissa and Arnold if they file a joint return?

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Question 13

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

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Question 14

Discuss the treatment of losses from involuntary conversions.

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Question 15

Libby's principal residence is destroyed by a tornado.She is single and her realized gain is $360,000.Is it possible for Libby's recognized gain to be $0?

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Question 16

Define qualified small business stock under § 1045.

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Question 17

Define an involuntary conversion.

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Question 18

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 19

How does the replacement time period differ for the condemnation of real property used in a trade or business or held for investment when compared with that for other involuntary conversions?

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Quiz 15: Property Transactions: Nontaxable Exchanges