Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
26th Edition
ISBN: 9781337702621
Author: Kevin E. Murphy, Mark Higgins
Publisher: Cengage Learning
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Question
Chapter 12, Problem 21P
a.
To determine
Determine the amount realized by B Corporation.
b.
To determine
Calculate the gain or loss earned by B Corporation by the exchange:
c.
To determine
Determine the realized gain or loss recognized by B Corporation:
d.
To determine
Identify the character of recognized gain or loss:
e.
To determine
Determine the basis for B Corporation acquiring the building.
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An individual transfers $5,000 and a piece of land to a corporation in exchange for all of its stock. At the time of transfer, the land has an adjusted basis of $50,000 and a fair market value (FMV) of $75,000. The corporation assumes a $60,000 mortgage on the land as part of the transfer for a bona fide business purpose. What is the effect of the transfer?
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $520,000 and a fair value of $740,000. Kapono paid $54,000 cash to complete the exchange. The exchange has commercial substance.
Required:
What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
Assume the same facts as Requirement 2 and that the exchange lacked commercial substance. Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that…
A taxpayer exchanged land held for investment for another parcel of land. The transfer qualifies as a like kind exchange. The land had a basis of $330,000, a mortgage that will transfer with the land of $50,000, and a fair market
value of $520,000. The taxpayer will be receiving a parcel of land with a fair market value of $430 000 and cash of $40,000. Calculate the taxpayer's recognized gain or loss on this transaction and his basis in the new parcel of land and place the answers below without $ signs or commas:
Gain/Loss＝？
Basis＝？
Chapter 12 Solutions
Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
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