7.

[The following information applies to the questions displayed below.] Hans runs a sole proprietorship. Hans reported the following net 1231 gains and losses since he began business: (Leave no answer blank. Enter zero if applicable.)

	Net 1231
Year	Gains/(Losses)
Year 1	$(73,500)
Year 2	19,250
Year 3	0
Year 4	0
Year 5	13,400
Year 6	0
Year 7 (current year)	54,250

a. What amount, if any, of the year 7 (current year) $54,250 net 1231 gain is treated as ordinary income?

Ordinary income

?

b. Assume that the $54,250 net 1231 gain occurs in year 6 instead of year 7. What amount of the gain would be treated as ordinary income in year 6?

Ordinary income

?

9.

Kase, an individual, purchased some property in Potomac, Maryland, for $189,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kases Maryland property. Kase agrees to the exchange. What is Kases realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)

a. The transaction qualifies as a like-kind exchange and the fair market value of each property is $920,000.

?	?
?	?
Adjusted basis in new property	?

b. The transaction qualifies as a like-kind exchange and the fair market value of each property is $146,000.

?	?
?	?
Adjusted basis in new property	?