Question 1

Jamie 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 nephews. She makes a gift of depreciated property (i.e., adjusted basis exceeds fair market value) to Will, a gift of appreciated property (i.e., fair market value exceeds adjusted basis) to Jim, and leaves appreciated property to Sam in her will. Each of the properties has the same fair market value. From an income tax perspective, which nephew is her favorite?

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Question 2

Discuss the application of holding period rules to property acquired by gift and inheritance.

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Question 3

Morgan owned a convertible that he purchased two years ago for $46,000 and which he transfers to his sole proprietorship. How is the sole proprietorship's basis for the car calculated? What additional information does Morgan need?

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Question 4

What requirements must be satisfied for a delayed swap to qualify for § 1031 like-kind exchange treatment?

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Question 5

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 6

Define an involuntary conversion.

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Question 7

Sam and Cheryl, husband and wife, own property jointly. The property has an adjusted basis of $400,000 and a fair market value of $500,000.
a. Discuss the rules for the calculation of the adjusted basis of the property to Sam if he inherits his wife's share of the property and Sam and Cheryl live in a community property state.

b. If they live in a common law state?

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Question 8

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 9

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

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Question 10

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

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Question 11

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

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Question 12

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 13

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

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Question 14

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

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Question 15

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

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Question 16

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 17

Discuss the treatment of realized gains from involuntary conversions.

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Question 18

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

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Question 19

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

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Question 20

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