Ch 13 Test

Question 1

An apartment complex valued at $1,200,000, encumbered with a loan for $1,100,000, is exchanged for a retail building valued at $1,270,000, encumbered with a loan for $1,160,000. What is the amount of the boot in this transaction?
A. $20,000
B. $60,000
C. $90,000
D. $150,000

Answer 1

B. 60,000 (1160000-1100000=60000)

Question 2

Owens proposed a tax-deferred exchange of his home for Martin’s peach orchard. Which of the following is true?
A. Residential property can’t be traded for a peach orchard because they are not like-kind
B. The exchange can be made, but only if boot is included with the peach orchard
C. The exchange can be made without any special considerations
D. Principal residence property is not eligible for a tax-deferred exchange

Answer 2

D. Principal residence property is not eligible for a tax-deferred exchange