Question

1.    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 determined taking all of these facts into consideration?

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

2. 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.

3. 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 sale by Carl to his business associate?

a. No gain or loss was recognized.

b. $11,000 gain was recognized.

c. $12,000 gain was recognized.

d. None of the above is correct.

4.   Assume the same facts as in problem 3, except that Carl sold the duplex to the business associate two years after the exchange with Bob. Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, gain or loss did Bob recognize with respect to the exchange with Carl?

a.   No gain or loss was recognized.

b.   $11,000 gain was recognized.

c.   $214,000 gain was recognized.

d.   The transfer by Bob to Carl is a gift.

e.    $21,000

5. Under the facts of problem 3, what is Bob’s basis in the triplex?

a. $86,000

b. $279,000

c. $300,000

d. $312,000

6.   Assume the same facts as in problem 3, except that Carl sold the duplex to his business associate three years after the exchange with Bob. Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, is Carl’s recognized gain with respect to these transactions?

a. No gain or loss on the exchange with Bob, and $12,000 gain on the subsequent sale

b. $11,000 gain on the exchange with Bob, and $12,000 gain on the subsequent sale

c. $12,000 gain on the exchange with Bob, and $279,000 on the subsequent sale

d. None of the above is correct.

Answer 1

- 2 © correct option = a No gain or loss is recognized correct option=c The Transfer by Bob to care was a gift

(3) Duplea aclyuted - $ 86000 Sold duplex - $312000 Fair marked valill - $ 300000 Recognized gain = 12000 Gain = seld duplex - Fair market valen Gain = 312000 - 300000 Gain = $12000 Correct option=c Gain = Fair masket Value - Duplex adjusted Gain - 300000 - 86000 Gain = $214000 14) Correct option 5 Fair market value of the property was adjusted basis = $300000 . Correct optionc 16) Gain a sold dupler - Fair market value Gain 8312000 300000 Gain a $12000 Correct option=c