34. Bob owned a duplex used as rental property. The duplex had an adjusted basis

Question

34. Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. How much, if any, was Bob’s recognized gain or loss with respect to these transactions?
a. No gain or loss is recognized.
b. $11,000 gain is recognized.
c. $214,000 gain is recognized.
d. The transfer by Bob to Carl is a gift.
e. $21,000.

35. What Code Section or Sections govern the result in question 34?
a. Code Sections 1015 and 2503.
b. Code Sections 61 and 707.
c. Code Sections 318 and 1001.
d. None of the above, and the two governing sections are discussed in the short essay below.

36. Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. How much, if any, gain or loss did Carl recognize with respect to the transaction with Bob?

a. No gain or loss was recognized.

b. $21,000 gain was recognized.

c. The transfer by Bob to Carl was a gift.

d. None of the above is correct.

please explain. tk

Explanation / Answer

34. The answer is"c. $214,000 gain is recognized"

Bob's realized and recognized gain = 300,000 - 86,000 = $214,000. The exchange is not a like-kind exchange because as it is made with a related party who disposed of the property within 2 years after the exchange had taken place.

35. The answer is "a. Code Sections 1015 and 2503"

Code Sections 1015 and 2503 governs the result

in question 34.

36. The answer is ”d. None of the above is correct"

Cindy's realized and recognized gain on the sale = 312,000 - 300,000 = $12,000. She also recognized a gain on the exchange = 300,000 - 279,000 = $21,000 but it doesn't qualify as like kind. Hence, the basis of property sold is $300,00

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