a) The deferral of taxation on unrecognized gains from a nontaxable property tra

Question

a) The deferral of taxation on unrecognized gains from a nontaxable property transaction is

1. is generally accomplished by adjustments to the basis of the new or acquired property.

3. generally has no effect on the basis of the property.

4, results in a reduction of the basis of the acquired property by the amount of tax paid in a subsequent transfer of the property.

b)A gain is recognized in a nontaxable exchange to the extent that you receive property or cash. True or False

c)X owned an office building that he had purchased at a cost of $600,000 and that now had an adjusted basis of $400,000. In the current year, he traded it to a person who was not related to him for an apartment house having a fair market value of $500,000. The apartment house has 50 units and rents to individuals. The office building has 25 units and rents to Monty

Explanation / Answer

1.

1.

1. is generally accomplished by adjustments to the basis of the new or acquired property.

The basis of the property equals the basis of the qualifying property surrendered. Because the exchange is nontaxable you do not take a cost basis.

2.

True- In tax terminology, any cash or nonqualifying property included in a nontaxable exchange is called a boot. The party receiving the boot must recognize a portion of realized gain equal to the FMV of the boot.

3.

0- because it

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