Mito Company exchanged cash of $50,000 plus land and building worth $900,000 (the tax basis of the asset was $574,800 including the original cost of land of $200,000 and building of $500,250, less accumulated depreciation on the building of $125,450) for a like-kind building worth $950,000. As a result, Mito must recognize:

A. $325,200 gain. B. No gain or loss

C. $125,450 gain.

D. $50,000 gain.

E. None of the above

32. A calendar year taxpayer made three asset purchases this year. The first purchase was an office building that cost $52,000,000, the second purchase was a warehouse that cost $70,000,000 and the third was to purchase a single-family home for rent. What is the life of regular tax depreciation on each of these assets?

A. 39 years for each of the properties. B. 39 years for the office and warehouse and 27.5 years for the residential home. C. 27.5 years for each of the properties. D. 39 years for the office and 27.5 years for the warehouse and the residential home. E. 27.5 years for the office and warehouse and 39 years for the residential home.

33. Mary sells land for $100,000 which has a tax basis of $50,000. The terms of the sale provide that $50,000 of the proceeds are payable in 2016 and $50,000 are payable in 2017. Which of the following could be the tax consequence (circle more than one if more than one are possible):

A. Mary can defer the recognition of half of the gain until 2017. B. Mary can recognize all of the gain in 2016.

C. Mary can recognize all of the gain in 2017. D. Mary can recognize no gain in 2016 or 2017.

Facts and information below are needed to resolve questions 34 through 36:

Land Building Furniture & Fixtures

Original Cost - Unadjusted Tax Basis 15,000,000 60,000,000 300,000

Accumulated Depreciation - (20,000,000) (100,000)

Jim Realty LLC, a partnership owned entirely by individuals, sells an apartment building for $72,200,000. The basis of the building immediately prior to the sale is as follows:

34. Using the above information, determine the gain or loss on the sale of the apartment building to the individual owners.

35. Assuming that the allocation of the selling price is $20,000,000 to land, $52,000,000 to building and $200,000 to furniture and fixtures, prepare an estimate of the total taxes for the owners on the sale.

36. Prepare an alternative calculation for the sale with the total sales price of $72,200,000 that would result in lower taxes for the individuals.

Like-kind exchange

37. On December 15, 2018. Mixum LLC transfers a property (land, building and personal property) to a qualified intermediary in an attempt to consummate a like-kind exchange. The land is sold to an unrelated party on December 27, 2018, for $10,000,000; proceeds are allocable $2,000,000 to land, $7,000,000 to building and $1,000,000 to personal property. Mixums adjusted tax basis immediately prior to the transfer to the intermediary in each asset was as follows: land - $2,000,000, building - $5,000,000 and personal property - $0.

37a) Assume that replacement property is properly identified and exchanged on January 5, 2019 which has the following fair market values so Mixum pays an additional $500,000 and closes on January 15, 2019:

Land $2,500,000

Building $7,000,000

Personal Property $1,000,000

Describe the amount of gain recognized (if any), what year it is recognized and tax basis in each of the replacement properties (i.e. land, building and personal property).

37b) Assume that no replacement property is found and Mixum receives the $10,000,000 of sales proceeds from the qualified intermediary on January 15, 2019.

Describe the amount of gain recognized (if any) and what year it is recognized.