1. Which of the following exchanges qualify for §1031 treatment?

1. Computer for an office desk, both used in business

2. Inventory for a machine, both used in business

3. Land held for investment for an office building used in business

4. 500 shares of IBM stock for 500 shares of Dell stock

5. Business parking lot in downtown San Diego for land held for investment in New York

6. Land held for investment in Iowa for land held for investment in Florence, Italy

2. Ted and Sam exchange real property used for business purposes in a qualified like-kind exchange (Ted’s office building for Sam’s warehouse). Ted’s office building, which originally cost $340,000, has an adjusted basis of $200,000 due to depreciation charges. His office building is worth $240,000 (FMV). Ted still owes $50,000 on debt incurred to purchase the office building, and Sam is assuming this liability. Sam’s warehouse is worth $190,000 and his basis is $160,000 ($200,000 original cost minus $40,000 of A/D).

1. What is the amount of Ted’s realized gain (loss) on his old office building?

2. What is the amount and character of Ted’s recognized gain (loss) on his old office building?

3. What is Ted’s basis in his new warehouse?

4. What is the amount of Sam’s realized gain (loss) on his old warehouse?

5. What is the amount and character of Sam’s recognized gain (loss) on his old warehouse?

6. What is Sam’s basis in his new office building?

Answer rating: 100% (QA)

The following exchanges qualify for 1031 treatment Land held for investment for an office building u... View the full answer