How much is the deferred gain on the like-kind exchange?

$50,000

$84,226

$215,774

$265,774

BlockWorks Shell Return Information Using BlockWorks in the PRACTICE ENVIRONMENT, access and use the BlockWorks shell return for Esmeralda and Richard Thomas prior to answering the test questions relating to their return. The couples personal information and details relating to their wages and health care coverage have been pre-entered for you, but you will need to enter the information shown below to complete their return. Access and use the BlockWorks shell return by entering the four-digit code: 0811. A unique SSN will be generated by the software. Although the return can be accessed again by selecting the taxpayers name in the BlockWorks Client folder, be sure to note this unique shell SSN. New SSN: Save Your Work! It is recommended that you SAVE the work you have done so far on this test before accessing BlockWorks. If you fail to do so and you are automatically timed out, you will lose your work and have to start over. After entering the required information, you should either save a copy of the completed return or keep the shell return open. You will need to refer to the completed return to answer the test questions about this taxpayer. Instructions Before answering the questions related to this section, open the shell return and complete the following: 1. Enter the Form 1099-R related to Esmeraldas retirement distribution. Determine whether any additional entries are required to properly calculate the taxable amount and/or any applicable penalties. 2. Create a Schedule E for the rental activities for the Green Tree property. 3. Make the appropriate entries in Asset Manager to reflect the like-kind exchange of the Green Tree property. Senior Tax Analyst Certification Test (2023) Corresponding Test Questions After you have made the required entries and completed the couples tax return in BlockWorks, return to the test in Block Academy and answer the corresponding questions about this taxpayer. Case Study Introduction Esmeralda Essie Thomas was married to Richard Thomas until his sudden death in a car accident on March 13, 2022. Essie is the administrator of Richards estate. She would like to file a final joint return. (All of Richards assets passed to Essie upon his death outside of probate, and no Form 1041 or Form 706 was filed for his estate.) Scenario 1. Retirement Income In 2019, Richard began contributing to a Roth 401(k) through his employer. Essie was the sole beneficiary of the plan, and it passed to her upon his death. She did not roll over any of the plan funds into another account or plan. To pay some unexpected bills, Essie took a nonqualified distribution of $15,000 from the inherited Roth 401(k) plan. Essies Form 1099-R appears below. Senior Tax Analyst Certification Test (2023) 2. Rental Income Richard owned a small convenience store building, located at 1724 Green Tree Road, Your City, YS XXXXX (the Green Tree property), which he rented to a local business owner until the end of January. Richards rental activities with respect to this property did not rise to the level of a trade or business for the purpose of the qualified business income deduction, but he was an active participant in the rental activity for the purpose of the rental special allowance. Richard was not required to file any Forms 1099 related to this activity. Richard received $5,000 in rental income for the month of January. His former tenant provided a Form 1099-MISC reporting this payment. Details about the property appear in the table below. The Form 1099-MISC also appears below. The only expense related to the rental activity in 2022 was one month of depreciation on the building. Information about the building appears below. Description Placed in Service Cost Green Tree Property March 12, 2015 $100,000 (including $10,000 for land). As discussed in the next section, Richard disposed of the Green Tree property on January 31, 2022. Senior Tax Analyst Certification Test (2023) 3. Like-Kind Exchange Early this year, Richard decided that he wanted to exchange the Green Tree property for a similar property closer to their home. He identified a replacement commercial building located at 77 Weeping Willow Circle, Your City, YS XXXXX (the Weeping Willow property). Richard identified the replacement property and completed the exchange on January 31, 2022. Details of the exchange appear below. Property Given Up Description: Green Tree Property (1724 Green Tree Road) FMV at time of exchange: $350,000 (per sales agreement) Property Received Description: Weeping Willow Property (77 Weeping Willow Circle) FMV at time of exchange: $300,000 Additional cash received: $50,000 The exchange was not with a related party. Essie would like to defer the gain on this exchange to the maximum extent allowed by law. Note: The Weeping Willow property did not have a tenant in place at the time of the exchange. As of the end of 2022, the new property has not been placed into service as a rental. There was no income or expense related to this property in 2022.