Transactions: Like-kind Exchange, Stock, Bonds 44 Manuel exchanges a rental house at the beach with

Transactions: Like-kind Exchange, Stock, Bonds 44 Manuel

exchanges a rental house at the beach with an adjusted basis of $150,000 and a

fair market value of $125,000 for a rental house at the mountains with a fair

market value of $100,000 and cash of $25,000 What is the recognized gain or

loss?

a $0

b $100,000

c $25,000

d ($25,000)

e None of
the above

Chapter 15

45 Boston
exchanges a machine used in his trade or business for another machine In
addition, he gives shares of Intel stock which have a fair market value of
$27,000 and a basis of $13,000 The old machine has an adjusted basis of
$30,000 and the new machine has a fair market value of $80,000 What is the
recognized gain or loss and the basis of the new machine?

a $14,000
and $57,000

b $23,000
and $57,000

c $14,000
and $80,000

d $23,000
and $80,000

e None of
the above

Chapter 15

46 On August 10, 2003, an investor purchased 1,000 shares of Mauve Corporation for $30,000 On January 2, 2004, the stock became worthless What is the recognized gain or loss and how is it classified?
a $3,000 STCL
b $30,000 STCL
c $3,000 LTCL
d $30,000 LTCL
e None of the above

Chapter 16

48 Rica purchased for $4,500 a $5,000 bond when it was issued two years ago Rica amortized $250 of the original issue discount and then sold the bond for $4,875 Which of the following statements is correct?
a Rica has $125 of long-term capital gain
b Rica has $250 of long-term capital gain
c Rica has $375 of long-term capital gain
d Rica has $125 long-term capital loss
e None of the above

Chapter 16

49 On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc at $40 per share He purchased the option for $3,000 It was to remain in effect for five months The market experienced a decline during the latter part of the year, so Marco decided to let the option lapse as of December 1, 2004 On his 2004 income tax return, what should Marco report?
a A $3,000 long-term capital loss
b A $3,000 short-term capital loss
c A $3,000 § 1231 loss
d A $3,000 ordinary loss
e None of the above

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