The tax consequences to unrelated parties engaging in a nontaxable exchange are co platelet independent. For instance, one party could have a partially recognized gain while the other party could have an unrecognized loss.
4. The substituted basis of the qualifying property received In a nontaxable exchange c an be more, less, or equal to the cost of the property, depending on the gain or loss deferred on t he exchange.
5. If Firm A is transacting with the KILLS Partnership itself, the contribution of property (the percent Interest In the MGM Partnership) for a 10 percent equity interest In KILLS Is not seeable to both Firm A and KILLS Partnership.
However, If the other party Is a partner In KILLS (no the partnerships the exchange Is taxable to both parties. B. Mr.. Bi’s exchange of land for REV stock is taxable to Mr.. B but nontaxable to REV. C. Corporation Co’s exchange AT personally d. Tort real TTY Is taxable to Don parties. Company Ad’s exchange of inventory for a new computer system is taxable to Company Not enough information is provided to determine if the exchange is taxable to the 10th re party. 6. Because Firm Q is exchanging inventory for land, the exchange is taxable to Firm Q.
B cause Company M is exchanging business realty for investment realty, the exchange is a no taxable, likened exchange to Company M.
7. Company W exchanged marketable securities for $250,000 of the $2 million FM of Bal career: this exchange does not qualify as a like kind exchange. Consequently, Company W recognizes a $220,000 capital gain on the exchange.
8. If the value of the destroyed property exceeds the insurance reimbursement and the insurance reimbursement exceeds the property adjusted basis, the owner suffers an economic loss but realizes a gain.
9. A transfer of property to a corporation in exchange for the corporation’s stock is not seeable only f the transferor (or group of transferors) owns 80 percent or more of the corporation immediately after the exchange. A transfer of property to a partnership in exchange for an equity I interest is nontaxable regardless of the extent of the transferors ownership after the exchange.
10. An asset has a substituted basis if the current owner’s basis is determined by referee CE to the basis of a different asset disposed of by the owner.
An asset has a carryover basis if t he current owners Dad’s Is ten same as ten Dad’s AT ten asset 91
11. In ten nanas AT a previous owner. For financial statement purposes, gain or loss realized on the exchange of one asset f or another is usually included in current year income, even if the gain or loss is not recognized f or tax purposes. The book/ tax difference is temporary because the unrecognized gain or loss is merely deferred, not eliminated.
12.The taxpayer takes a substituted basis in the newly issued stock so that the deferred gain (equal to the unrealized appreciation in the transferred property) is embedded in the stock. However, the corporation takes a carryover basis in the property so that the corporation will race engine the unrealized appreciation on subsequent disposition of the property. Thus, both the SSH railroader and the corporation have deferred gain with respect to their new assets.
13. Congress has no quarrel with taxpayers who sell securities at a gain, then immediately y reacquire the securities.