Question 1

_____ 4. The holding period for boot in a like-kind exchange begins on the date of the exchange.

Accepted Answer

According to the IRS, the holding period for boot received in a like-kind exchange begins on the date of the exchange.

Question 2

_____ 3. A business airplane exchanged for a fleet of trucks, all used for the delivery of manufactured goods, is a qualifying like-kind exchange.

Accepted Answer

False

Question 3

_____ 16. Internal Revenue Code Section 351, relating to transfers to a controlled corporation, can apply to transfers to both a new and an existing corporation.

Accepted Answer

Section 351 applies to both new and existing corporations, as long as the transfer meets the qualifications set forth in the statute.

Question 4

_____ 14. Both gain and loss are deferred in a wash sale.

Accepted Answer

The answer of _____ 14. Both gain and loss are...

Question 5

_____ 8. A condemnation is one type of involuntary conversion.

Accepted Answer

A condemnation occurs when the government takes private property for public use, and the property owner is entitled to receive just compensation for the property taken. This is considered an involuntary conversion under tax law.

Question 6

_____ 9. The loss on the total destruction of business property is always its adjusted basis regardless of fair market value.

Accepted Answer

According to the tax code, the loss on the total destruction of business property is always its adjusted basis and not its fair market value.

Question 7

What is the difference between a carryover basis and a substituted basis?

Accepted Answer

The answer of What is the difference between a carryover...

Question 8

_____ 7. The taxpayer-use test for deferral of gain on an involuntary conversion requires the taxpayer to acquire property that has the same function or use as the involuntarily converted property that he or she used prior to the conversion.

Accepted Answer

The answer of _____ 7. The taxpayer-use test for deferral...

Question 9

_____ 6. For a nonsimultaneous exchange to qualify for like-kind provisions, the taxpayer must identify the property to be acquired within 90 days and actually close the transactions within 180 days.

Accepted Answer

The answer of _____ 6. For a nonsimultaneous exchange to...

Question 10

When is gain recognized in a like-kind exchange?

Accepted Answer

The answer of When is gain recognized in a like-kind...

Question 11

____ 15. A taxpayer must transfer a minimum required amount of property, along with any services performed, to include the stock received in meeting the control requirement for a corporate formation.

Accepted Answer

This statement describes the requirement of a taxpayer in a corporate formation to transfer a minimum amount of property and services, along with the stock received, to meet the control requirement. This is true.

Question 12

_____ 17. Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Accepted Answer

Liabilities assumed by a partnership or corporation have different effects on the owners' bases in their ownership interests. In a partnership, assuming a liability increases the basis of the partner's ownership interest, whereas in a corporation, assuming a liability does not affect the basis of the shareholder's ownership interest.

Question 13

_____ 5. Both gain and loss are deferred in a like-kind exchange.

Accepted Answer

In a like-kind exchange, both the gain and loss are deferred until the property received in the exchange is sold or disposed of.

Question 14

_____ 1. The holding period for property received in a qualifying like-kind exchange begins on the date the new property is received.

Accepted Answer

The answer of _____ 1. The holding period for property...

Question 15

_____ 13. If a taxpayer's personal residence is involuntarily converted, the taxpayer can only defer gain by acquiring a new residence in the required time period using IRC §1033.

Accepted Answer

The answer of _____ 13. If a taxpayer's personal residence...

Question 16

_____ 11. A theft loss of $10,000 cash by an individual results in a $10,000 casualty loss deduction.

Accepted Answer

A theft loss is considered a casualty loss, but it is subject to limitations and may not result in a full deduction. The loss must exceed $100 and 10% of the individual's adjusted gross income to be deductible.

Question 17

By what mechanism is a deferral of gain normally accomplished?

Accepted Answer

The answer of By what mechanism is a deferral of...

Question 18

_____ 12. To defer gain recognition on an involuntary conversion, qualifying property must be obtained
within a specified time period.

Accepted Answer

To defer gain recognition on an involuntary conversion, qualifying property must be obtained within a specified time period, typically 2 years for personal property and 3 years for real property.

Question 19

_____ 10. Expected insurance settlements have no effect on the timing of the deduction for a casualty loss.

Accepted Answer

Expected insurance settlements can affect the timing of the deduction for a casualty loss, as the deduction is typically reduced by any expected insurance recovery.

Question 20

_____ 2. Boot received in a like-kind exchange never causes loss to be recognized.

Accepted Answer

Boot received in a like-kind exchange is treated as if no gain or loss was recognized on the exchange, and the adjusted basis of the new property is decreased by the amount of the boot received.

Quiz 9: Tax-Deferred Exchanges