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12-34

Value of land received


Add: Liability to warehouse
Total consideration received
less Basis of warehouse
Gain realized

Basis of the warehouse


less: Boot received
Add: Gain recognized
Basis of new land received

$ 90,000
20,000
$110,000
(50,000)
60, 000

$50,000
( 20,000)
20,000
$50,000

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Total
Amount realized
less: Basis of land
Gain realized
Gain recognized

Securities
$ 150,000
(60,000)
90,000
15,000

Land
$25,000
(10,000)
(50,000)
15,000
75,000
15,000
0

$125,000

The basis for the apartment building is


$75,000 ($50,000 + $10,000 + $15,000 recognized gain).
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Amount realized $25,000
les: Basis
( 3,000)
Gain realized $22,000
Recognized Gain
a. $ 2,500
b. -0c. $ 1,400

Basis of Land Purchased


3,000
6,500
3,000

12-40
a. $ 840,000.
b. December 31, 2017
c. Zero. None of the gain may be deferred as an office building and a storage tank
are not functionally related. Therefore, Newark must recognize a gain of $240,000 ($840,000 $600,000).
d. If real property used in a trade or business is condemned, the replacement period
is three years from the end of the tax year in which the gain is realized
property may be replaced by obtaining like-kind property. Since the replacement property cost
$810,000 and the amount realized is $840,000, only $30,000 of the gain is recognized. The

remaining gain of $210,000 ($240,000 - $30,000) is deferred

12-40
a. $ 840,000.
b. December 31, 2017
c. 0. no gain may be deferred as an office building and a storage tank
are not functionally related. newark must recognize a gain of $240,000
d. If real property used in a trade or business is condemned, the replacement period
is three years from the end of the tax year in which the gain is realized. Newark must replace the
properties by December 31, 2018.
12-41
a. $30,000 of the gain must be recognized.
b. 0. All of the gain may be deferred.
c. This is not a replacement of property the recognized gain is $300,000.
d. The replacement period ends on December 31, 2017 therefore, the recognized
gain is $300,000
12-42
a. The gain of $30,000 is recognized. Section 1033 does not apply since she does not
plan to replace the property.
b. She does not have to recognize a gain because of the severance damages.
Severance damages reduce her basis, and a gain is recognized only if the severance damages
received exceed the basis.
c. $2,500 ($10,000 - $7,500).
12-43
Selling price
$180,000
less: Selling expenses
( 8,000)
Amount realized
$172,000
less: Basis
( 61,000)
Gain realized
$111,000
The realized gain is $111,000
the basis of the new residence is its cost, $162,000

12-45
a. $250,000. If Joe lives inside of the house for two years then they could except up to
$500,000 of gain.
b. $250,000.

12-46
a. Yes they may exclude the gain the basis of the residence is $480,000.
b. Yes they may defer the gain the basis of the residence is $370,000 ($480,000 - $110,000).
12-47
0 because the $25,000 realized gain is less than $69,178
12-50
a. $204,000 ($300,000 - $96,000)
b. $4,000 of the gain is recognized
12-51
a. $24,000. ($80,000 - $6,000) - $50,000
b. there recognize gain and Sec. 121 applied
c. $51,000.($148,000 - $7,000) - $90,000
d. $51,000. The two year use and ownership tests are not met
12-52
a. $122,000.realized gain ($200,000 - $8,000) - $70,000
b. Recognized gain is 0
c. $240,000 realized gain ($520,000 - $30,000) - $250,000
d. Recognized gain is $26,301. They may exclude up to $213,699 (312/730 x
$500,000) although the two-year use and ownership tests are not satisfied.