AC 507 Unit 5 Quiz (Kaplan University)
- Willow Corporation exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by Tree Corporation valued at $350,000 (adjusted basis = $200,000) and $50,000 cash. In addition, Willow assumed the $150,000 mortgage on Tree’s building. What are Willow and Tree’s realized gains or losses on the properties exchanged, respectively?
- Zandu Corporation exchanged a building (fair market value = $1,000,000, adjusted basis = $700,000) and two semi-tractor-trailers (fair market value = $300,000; adjusted basis = $225,000), all five years old, for land to build a new facility valued at $1,300,000. What is Zandu’s realized and recognized gain and its basis in the land?
- Trudi Corporation has a building that it needs to sell or exchange because of growth in its business. If Trudi sells the building, it will have a gain of $450,000. What is the amount of taxes that Trudi will avoid paying if it can exchange the building? The corporation has $1,000,000 of taxable income from operations for the current year.
- As part of a divorce decree, Janet must give her ex-spouse Herman her half-interest in stock with a total value of $120,000 (total basis = $70,000) in exchange for his half-interest in their home with a total value of $150,000 and a basis of $130,000. What are Janet and Herman’s realized and recognized gains or losses on this exchange?
- Wally’s investment real estate was condemned on November 14, 2014. On February 14, 2015, he received $250,000 for the property that had a basis of $210,000. What is the last date that Wally can acquire replacement property to avoid gain recognition?
- Which of the following is not a characteristic of involuntary conversions?
- Bertam transfers property with a $50,000 mortgage, a fair market value of $350,000, and a basis of $200,000 for stock valued at $300,000. If the corporation assumes the mortgage, what is Bertram’s basis in the stock received in this qualifying Section 351 transaction?
- Sophie received a 30 percent interest in a general partnership in exchange for property valued at $35,000 (adjusted basis = $25,000) and services valued at $5,000. In addition, the partnership assumed the $10,000 liability on the property. What is Sophie’s basis in her partnership interest?
- Which of the following is not a characteristic of a corporation?
- The maximum marginal corporate tax rate excluding surtaxes is:
- A transfers machines valued at $170,000 (basis = $150,000) along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000) to the corporation. A receives 40 percent of the outstanding stock and B receives 60 percent. B also receives $20,000 from the corporation. What is B’s basis for his AB stock?
- A corporation that owns 72 percent of all the outstanding stock of another corporation:
- The Willow Corporation reported $400,000 of taxable income. In making a conversion to book income, the accountant had to adjust for the following: a $25,000 Section 179 deduction, but book depreciation would have been $5,000; a fine of $12,500 for overweight trucks; and a net capital loss of $10,000. What is Willow Corporation’s book income?
- Elizabeth exchanges her retail storage assets for retail displays. In this like-kind exchange, Elizabeth receives $2,000 in cash. The storage assets have a fair market value of $12,000 and Elizabeth’s basis in the assets is $3,000. The displays have a fair market value of $10,000 and a basis of $8,000. What is Elizabeth’s realized gain on the exchange?