Chapter 9

Question 1

Realized Gain =

Answer 1

Greater FMV - Basis surrendered (- Boot Paid if applicable)

Question 2

Recognized Gain =

Answer 2

Lesser of 1) Realized Gain or 2) Boot Received

Min(Realized Gain ; Boot Received)

Question 3

Equation for Basis
(Paying Boot)

Answer 3

Basis of property surrendered
+
FMV Boot Paid

Question 4

Basis Equation
(Boot Received)

Answer 4

Basis of property surrendered
+
Recognized Gain
-
FMV Boot Received

Question 5

Cash has _____ and _____

Answer 5

Value & Basis!

Question 6

Involuntary conversion requirements:

Answer 6

1) invest in similar property
2) reinvest by end of the 2nd tax year following the tax year of the incident

Question 7

Involuntary Conversion Gains/Losses

Answer 7

Gain = can defer all or part
Loss = recognize all as ordinary

Question 8

New Basis =
(Involuntary Conversions)

Answer 8

Cost - Unrealized Gain

Unrealized gain = realized - recognized

Question 9

Wash Sales

Answer 9

Losses in marketable securities

Must be reinvested outside of the 60 day window (+- 30)

Question 10

New shares basis =

Answer 10

Cost + disallowed loss