Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 16, Problem 5DQ
To determine
Identify whether the given transaction is eligible for the real property subdivided for sale rules and explain it.
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Kase, an individual, purchased some property in Potomac, Maryland, for $150,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase’s Maryland property. Kase agrees to the exchange.
What is Kase’s realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
a. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $675,000.
Kase, an individual, purchased some property in Potomac, Maryland, for $166,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase's Maryland property. Kase agrees to the exchange.
What is Kase's realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios?
Note: Loss amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable.
b. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $101,000.
Kase, an individual, purchased some property in Potomac, Maryland, for $155,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase's Maryland property. Kase agrees to the exchange.
What is Kase's realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios?
Note: Loss amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable.
a. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $787,500.
Chapter 16 Solutions
Individual Income Taxes
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