1. Joyce exchanges a machine used in her trade or business for another machine. In addition, she gives 200 shares of Alpha Corporation stock which have a fair market value of $38,000 and a basis of $29,000. The old machine has an adjusted basis of $36,000 and the new machine has a fair market value of $100,000. What is the recognized gain or loss and the basis of the new machine?
a.$26,000 and $74,000.
b.$9,000 and $74,000.
c. $26,000 and $100,000.
d. $9,000 and $100,000.
e. None of the above.
2. In order to qualify for like-kind exchange treatment:
a. The form of the transaction must be an exchange.
b. Both the property transferred and the property given must be held for productive use in a trade or business or for investment.
c. The property must be like kind.
d. All of the above.
e. None of the above.
3.In regard to nontaxable exchanges which, if any, of the following is correct?
a.Neither realized gains or losses are recognized.
b.Realized gains are not recognized but realized losses are recognized.
c.Realized gains and losses are recognized.
d.Realized losses are not recognized but realized gains are recognized.
e.None of the above.
4. Taxpayer receives stock as a gift from his nephew. The adjusted basis of the stock is $15,000 and the fair market value is $37,000. Taxpayer trades the stock for bonds with a fair market value of $35,000 and $2,000 cash. What is his recognized gain and the basis for the bonds?
a. $2,000, $17,000.
b. $0, $15,000.
c. $2,000, $15,000.
d. $22,000, $35,000.
e. None of the above.