Property Dispositions questions and problems

May 12th, 2015
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In a sale of property, the amount realized consists of cash or a cash equivalent (purchaser’s note). In an exchange of property, the amount realized includes non cash assets. If a taxpayer is relieved of a debt on the disposition of an asset (i.e., the purchaser assumes the seller’s debt), the relief of debt is an amount realized. If the taxpayer receives services in exchange for the asset, the fair market value of the services is an amount realized.

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Chapter 8Chapter 8 - Property DispositionsChapter8QuestionsandProblemsforDiscussion1.a. Section1231asset.b. Capitalasset.c.Section1231asset.d. Capitalasset.e. Noncapitalasset.f.Capitalasset.g. Capitalasset.h. Section1231asset.2.Inasaleofproperty,theamountrealizedconsistsofcashoracashequivalent(purchasers note).Inanexchangeofproperty,theamountrealizedincludesnoncashassets.3.Ifataxpayerisrelievedofadebtonthedispositionofanasset(i.e.,thepurchaserassumesthe sellersdebt),thereliefofdebtisanamountrealized.Ifthetaxpayerreceivesservicesin exchangefortheasset,thefairmarketvalueoftheservicesisanamountrealized.4.Ifataxpayerhaslossesthatcouldbedeductedagainstgainrecognizedonaninstallmentsale, thetaxpayermightelectoutoftheinstallmentsalemethod.Alternatively,ifthetaxpayers marginalrateintheyearofsaleisconsiderablylowerthantheprojectedmarginalrateinfuture years,thetaxpayermightprefertorecognizetheentiregainintheyearofsale.5.Thecharacterizationofgainorlossfortaxpurposeshasnoeffectonthecomputationofnet incomeperbooks.6.Afirmstaxbasisinanassetincludesanyportionoftheas

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