a. Gain is likely recognized.
b. Gain is likely recognized.
c. Gain may not be recognized if it meets the like-kind exchange requirements.
d. Gain is likely recognized.
e. Gain may not be recognized if it meets the like-kind exchange requirements.
The tax consequences of these transactions would depend on whether they qualify for like-kind exchange treatment under Section 1031 of the Internal Revenue Code. Let's analyze each transaction:
a. Rental house exchanged for personal-use river cottage:
This does not qualify for like-kind exchange treatment because personal-use property is not like-kind to business or investment property.
Result: Gain is likely recognized.
b. General Motors stock exchanged for Quaker Oats stock:
This does not qualify for like-kind exchange treatment because stocks are not like-kind.
Result: Gain is likely recognized.
c. Land and building used as a furniture repair shop exchanged for land and building used as a car dealership:
If the properties are of like-kind (both real estate), and the exchange is for business or investment purposes, it may qualify for like-kind exchange treatment.
Result: Gain may not be recognized if it meets the like-kind exchange requirements.
d. Office building exchanged for a heavy-duty truck:
Real property exchanged for personal property does not qualify for like-kind exchange treatment.
Result: Gain is likely recognized.
e. Residential rental property exchanged for a warehouse:
If both properties are held for investment, and the exchange meets like-kind exchange requirements, it may qualify for like-kind exchange treatment.
Result: Gain may not be recognized if it meets the like-kind exchange requirements.
Complete question:
Is any gain recognized in the following transactions?
a. Rental house with an adjusted basis of $100,000 exchanged for personal-use river cottage with an FMV of $130,000.
b. General Motors common stock with an adjusted basis of $19,000 exchanged for Quaker Oats common stock with an FMV of $14,000.
c. Land and building with an adjusted basis of $25,000 used as a furniture repair shop exchanged for land and a building with an FMV of $52,000 used as a car dealership.
d. An office building with an adjusted basis of $22,000 exchanged for a heavy-duty truck with an FMV of $28,000. Both properties are held 100% for business purposes.
e. A residential rental property held for investment with an adjusted basis of $230,000 exchanged for a warehouse to be held for investment with an FMV of $180,000.