When is Gross Income Reportable: NonRecognition of Property Transaction

Question 1

Nonrecognition on Property Transaction

Answer 1

Sometimes, sale or exchange of property that normally give rise to realized gains/loss is not realized, and is instead postponed.

Question 2

Gain/Loss Not Recognized on Sale When:

Answer 2

Transferred Between Spouses, Divorce Settlements, Like-Kind Exchange

Question 3

Transferred Between Spouses

Answer 3

Any transfer between living spouses is a nonrecognition

Question 4

Divorce Settlements

Answer 4

Nonrecognition rules applies

Question 5

Like-Kind Exchanges (Carry Over Basis)

Answer 5

No gain/loss is recognized if business OR investment property is exchanged for an other business or investment property of LIKE-KIND.

Question 6

Like-Kind Property

Answer 6

All real-estate is like kind, intangible property does not qualify, inventory AND other property that taxpayer hold for sale to customers DOES NOT QUALIFY.

Question 7

Boot Definition

Answer 7

If taxpayer recieves money or non-like property in exchange.

gain is recognized up to the lesser of: the realized gain OR amount of boot.

CANNOT recognized more gain than realized.

Question 8

Involuntary Conversion

Answer 8

Rollover Privions - taxpayer can transfer property inexchange for case and still get nonrecognition, SO LONG AS he/she replaced property given up.

Time Period - begins when conversion takes place, and ends TWO YEARS after the end of that year.