Questions from General Taxation

Q: Company JK disposed of the following items of business realty in a

Company JK disposed of the following items of business realty in a likekind exchange. In exchange for the two items, JK received like-kind realty worth $50,000 and $5,000 cash.

Q: NBV, a California corporation, exchanged commercial real estate located in

NBV, a California corporation, exchanged commercial real estate located in San Francisco for commercial real estate located in Tokyo, Japan. NBV’s gain realized was $16.3 million.

Q: FM Inc. operates a dairy farm. The local government required

FM Inc. operates a dairy farm. The local government required the corporation to destroy 150 head of cattle because the herd had been exposed to mad cow disease. None of the cattle displayed any sympto...

Q: Company T operated a drive-in movie theater for over a

Company T operated a drive-in movie theater for over a decade. Three years ago, the company ceased operations because so few people were attending the outdoor facility. This year, the entire facility...

Q: In 2017, an office building owned by Firm F was completely

In 2017, an office building owned by Firm F was completely destroyed by fire. F’s adjusted basis in the building was $485,000, and its insurance reimbursement was $550,000. On its 2017 tax return, F e...

Q: In 2017, an industrial plant owned by Company C, a

In 2017, an industrial plant owned by Company C, a calendar year taxpayer, was destroyed in a flood. C’s adjusted basis in the plant was $1.65 million, and the company received a $2 million insurance...

Q: In 2018, transportation equipment owned by Corporation ABC was stolen.

In 2018, transportation equipment owned by Corporation ABC was stolen. The adjusted basis in the equipment was $105,000, and ABC received a $400,000 insurance reimbursement. It immediately paid $440,0...

Q: Mr. P, a professional architect, entered into an agreement

Mr. P, a professional architect, entered into an agreement with Partnership M under which he designed three buildings for the partnership and transferred a copyright for design software to the partner...

Q: Ellie has operated a sole proprietorship for six years during which net

Ellie has operated a sole proprietorship for six years during which net profit has been stable and Ellie’s marginal tax rate has been a constant 24 percent. Ellie projects that her profit next year wi...

Q: Paula’s Schedule K-1 from an LLC reported a $12

Paula’s Schedule K-1 from an LLC reported a $12,000 share of ordinary loss and a $1,900 share of capital loss. Paula’s adjusted basis in her LLC interest before consideration of these losses was $6,20...