1. © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Essentials of Taxation 1 Chapter 7 Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

2. 2 The Big Picture (slide 1 of 5) Alice owns land that she received from her father 10 years ago as a gift. The land was purchased by her father in 1992 for $2,000 and was worth $10,000 at the time of the gift. –Alice’s father did not owe gift taxes upon making the transfer. The property is currently worth about $50,000. Alice is considering selling the land and purchasing a piece of undeveloped property in the mountains.

3. 3 The Big Picture (slide 2 of 5) Alice also owns 500 shares of AppleCo stock. –300 of which were acquired as an inheritance when her grandfather died in 1996. Alice’s grandfather paid $12,000 for the shares, and The shares were worth $30,000 at the time of his death. –The other 200 shares of AppleCo were purchased by Alice two months ago for $28,000. The stock is currently worth $120 per share, and Alice is considering selling the shares.

4. 4 The Big Picture (slide 3 of 5) Alice owns a house that she inherited from her grandmother 2 years ago. A developer has recently offered Alice $600,000 for the property. –The fair market value of the house at the date of her grandmother’s death was $475,000. –Her grandmother’s basis for the house was $275,000. Alice is considering selling the house. –She expects any selling expenses to be minimal,

5. 5 The Big Picture (slide 4 of 5) The building Alice used in her business, adjusted basis of $50,000, was destroyed by a fire on October 5, 2015. –On November 17, 2015 she receives an insurance reimbursement of $100,000 for the loss. –Alice intends to invest $80,000 of the insurance proceeds in a new building and use the other $20,000 to pay off credit card debt.

6. 6 The Big Picture (slide 5 of 5) Alice has come to you for tax advice with respect to the property she owns. –What is the recognized gain or loss for the land, stock, and house if they are sold? –Can Alice avoid paying taxes on any of the sales? Alice’s objectives are to minimize the recognition of any realized gain and to maximize the recognition of any realized loss. Read the chapter and formulate your response.

7. 7 Determination of Gain or Loss (slide 1 of 7) Realized gain or loss –Difference between amount realized from sale or other disposition of the asset and its adjusted basis –Sale or other disposition Includes trade-ins, casualties, condemnations, thefts, bond retirements

8. 8 Determination of Gain or Loss (slide 2 of 7) Amount realized from disposition –Total consideration received, including cash, FMV of property received, mortgages/loans transferred to buyer Fair market value (FMV): Value of asset determined by arms-length transaction, i.e., amount set by transaction between willing buyer and seller with neither obligated to enter into transaction –Reduced by any selling expenses

9. 9 Determination of Gain or Loss (slide 3 of 7) Adjusted basis –Original cost (or other adjusted basis) plus capital additions less capital recoveries

10. 10 Determination of Gain or Loss (slide 4 of 7) Capital additions –Cost of improvements and betterments to the property that are capital in nature and not currently deductible

11. 11 Determination of Gain or Loss (slide 5 of 7) Capital recoveries –Amount of basis recovered through: Depreciation or cost recovery allowances Casualty and theft losses (and insurance proceeds) Certain corporate distributions Amortizable bond premium Easements

12. 12 Determination of Gain or Loss (slide 6 of 7) Recognized gain or loss –Amount of realized gain (loss) that is included in (deducted from) gross income

13. 13 Determination of Gain or Loss (slide 7 of 7) Realized gains and losses are not always recognized –Realized gains may be deferred or excluded –Realized losses may be deferred or disallowed Realized losses from the sale, exchange, or condemnation of personal use assets (e.g., a personal residence) is not recognized for tax purposes –Exception - casualty or theft losses from personal use assets In contrast, any gain realized from the sale or other disposition of personal use assets is, generally, fully taxable

14. 14 Determination of Gain or Loss (slide 7 of 7) Realized gains and losses are not always recognized –Realized gains may be deferred or excluded –Realized losses may be deferred or disallowed Realized losses from the sale, exchange, or condemnation of personal use assets (e.g., a personal residence) is not recognized for tax purposes –Exception - casualty or theft losses from personal use assets In contrast, any gain realized from the sale or other disposition of personal use assets is, generally, fully taxable

15. 15 Basis Considerations (slide 1 of 5) Original basis of an asset is generally its cost Bargain purchase assets have a basis equal to their FMV –Bargain amount may be income to purchaser (e.g., employee = compensation; shareholder = dividend)

16. 16 Basis Considerations (slide 2 of 5) Identification problems –Security sales where specific identification not possible, use FIFO to compute basis

17. 17 Basis Considerations (slide 3 of 5) Allocation problems: lump-sum purchase –Must allocate basis to each asset obtained –Allocation usually based on relative FMV of assets

18. 18 Basis Considerations (slide 4 of 5) Allocation problems: Going concern purchase –Assign purchase price to assets (excluding goodwill) to extent of their total FMV –Then allocate among assets based on FMV –Residual amount is goodwill Goodwill is an amortizable § 197 asset –Allocation applies to both purchaser and seller

19. 19 Basis Considerations (slide 5 of 5) Allocation problems: Nontaxable stock dividends –Basis of original shares is allocated over the original and new shares Based on number of shares (common on common), or Based on relative FMV (preferred on common) –Holding period includes the holding period of the original shares

20. 20 Gift Basis (slide 1 of 6) Gift property may have a dual basis, i.e., basis for gain and loss may differ Basis is dependent on relationship between FMV at date of gift and donor’s adjusted basis

21. 21 Gift Basis (slide 2 of 6) Gift basis for cost recovery –The donee's basis for cost recovery is the donor’s basis (donee's gain basis)

22. 22 Gift Basis (slide 3 of 6) Gift basis for subsequent gain –When a gifted asset is disposed of by the donee, the basis for calculating any gain is the donor’s adjusted basis (carryover basis) –This basis is called the “gain basis” Gain basis may be increased if donor incurred gift tax on gift –Holding period for donee includes that of donor

23. 23 The Big Picture - Example 15 Gift – Carryover Basis Return to the facts of The Big Picture on p. 7-1. Alice’s father purchased the land in 1992 for $2,000. He gave the land to Alice 10 years ago, when the fair market value was $10,000. –No gift tax was paid on the transfer. Alice is considering selling the land, which is currently worth $50,000. –If she sells the property for $50,000, Alice will have a realized gain of $48,000 ($50,000 amount realized - $2,000 basis in the land).

24. 24 Gift Basis (slide 4 of 6) Gift basis for subsequent loss –When a gifted asset is disposed of by a donee, the basis for calculating any loss is the lesser of FMV at the date of gift or the donor’s adjusted basis –This basis is called the “loss basis”

25. 25 Gift Basis (slide 5 of 6) Gift basis for subsequent loss –If FMV < donor’s basis on the date of the gift, a dual basis will exist for the asset Gain basis = donor’s basis Loss basis = FMV on date of gift –If dual basis and sold for loss, holding period for donee starts on date of gift

26. 26 The Big Picture - Example 16 Gift – Loss Basis Return to the facts of The Big Picture on p. 7-1. Instead, assume Alice’s father had purchased the land in 1992 for $12,000. –He gave the land to Alice 10 years ago, when the fair market value was $10,000 and paid no gift tax on the transfer. If Alice sells the property for $50,000, she has a realized gain of $38,000. –$50,000 amount realized - $12,000 basis in the land. However, if the property has declined in value and Alice sells the land for only $8,000, she will realize a loss of $2,000. –$8,000 amount realized - $10,000 basis in the land.

27. 27 Gift Basis (slide 6 of 6) Gift basis when no gain or loss –If a dual basis exists and the amount realized from the disposition of a gifted asset falls between the gain basis and the loss basis No gain or loss is realized –Holding period for donee is not needed since there is no gain or loss

28. 28 The Big Picture - Example 17 Gift – No Gain Or Loss Return to the facts of The Big Picture on p. 7-1. Assume Alice’s father had purchased the land for $12,000. –He gave the land to Alice 10 years ago when it was worth $10,000. –No gift tax was paid on the transfer. Now, Alice plans to sell the property for $11,000. To calculate gain, she would use a basis of $12,000, her father’s basis. –But when a $12,000 basis is compared to the $11,000 sales proceeds, a loss is produced. To calculate loss, Alice must use the property’s fair market value at the date of gift—namely, $10,000. –When a $10,000 basis is compared to sales proceeds of $11,000, a gain is produced. Accordingly, no gain or loss is recognized on this transaction.

29. 29 Gift Basis- Adjustment For Gift Taxes (slide 1 of 2) The proportion of gift tax paid (on gifts after 1976) by the donor on appreciation of asset can be added to basis of donee The donee's basis is equal to: Donor’s basis + [(unrealized appreciation/taxable gift) × gift tax]

30. 30 Gift Basis- Adjustment For Gift Taxes (slide 2 of 2) Example of gift tax: –Cathy received a gift from Darren on June 15 of this year –FMV on June 15 was $34,000 –Darren had a basis in the asset of $29,000 –Darren paid gift tax of $800 –Cathy’s basis in the gifted property is $29,200 [$29,000 + ($5,000/($34,000 – $14,000) × $800)]

31. 31 Property Acquired from a Decedent (slide 1 of 6) Generally, beneficiary’s basis in inherited assets will be the FMV of the asset at decedent’s date of death –Exception: If the executor/administrator of estate elects alternate valuation date, basis is FMV on such date Inherited property is always treated as long- term property

32. 32 The Big Picture - Example 20 Property Acquired From A Decedent Return to the facts of The Big Picture on p. 7-1. Alice owns 500 shares of AppleCo stock, 300 of which were inherited from her grandfather. –Her grandfather’s cost basis in the stock was $12,000. –The shares were worth $30,000 at the time of his death. Alice purchased the other 200 shares for $28,000. Her basis in the 500 AppleCo shares is $58,000. –The 300 shares received as an inheritance take a stepped up basis of $30,000, and –The 200 shares purchased take a cost basis of $28,000.

33. 33 Property Acquired from a Decedent (slide 2 of 6) Inherited property valuation date –Date assets valued for estate tax is either: Date of decedent’s death, which is called the primary valuation date (PVD), or 6 months after date of decedent’s death, which is called the alternate valuation date (AVD) –Can only be elected if both the value of gross estate and the estate tax liability are lower than if PVD was used

34. 34 Property Acquired from a Decedent (slide 3 of 6) Inherited property valuation date –When PVD is used, beneficiary’s basis will be the FMV at date of decedent’s death –When AVD is used, beneficiary’s basis will be the FMV at the earliest of: Date asset is distributed from estate, or 6 months after date of decedent’s death

35. 35 Property Acquired from a Decedent (slide 4 of 6) Example of inherited property valuation: –At Rex’s date of death, April 30 of this year, his assets had an adjusted basis of $200,000, and a FMV of $700,000 PVD selected and assets distributed June 30; beneficiary’s basis is $700,000

36. 36 Property Acquired from a Decedent (slide 5 of 6) Example of inherited property valuation (cont’d) –October 30 this year (six months after date of Rex’s death), the assets had a FMV of $650,000 AVD selected and assets distributed November 10; beneficiary’s basis is $650,000 AVD selected and assets distributed June 30 when FMV of assets is $670,000; beneficiary’s basis is $670,000

37. 37 Property Acquired from a Decedent (slide 6 of 6) Deathbed gifts –Property inherited by taxpayer (or spouse) which was both appreciated and gifted by same taxpayer to decedent within 1 year of decedent's death –Beneficiary’s basis in property is carryover of decedent’s basis (not date of death FMV) –Generally the same basis taxpayer had on date of gift

38. 38 Disallowed Losses (slide 1 of 5) Related parties (§ 267) –Losses on sale of assets between related parties are disallowed –For income-producing or business property, any loss disallowed can be used to reduce gain recognition on subsequent disposition of asset to unrelated party Only available to original transferee Not available for sales of personal use assets

39. 39 Disallowed Losses (slide 2 of 5) Related parties include: –Family members, –Corporation and a shareholder who owns greater than 50% (directly or indirectly) of the corporation, and –Partnership and a partner who owns greater than 50% (directly or indirectly) of the partnership

40. 40 Disallowed Losses (slide 3 of 5) Wash sales –Losses from wash sales are disallowed –Wash sale occurs when taxpayer disposes of stock or securities at loss and acquires substantially identical stock or securities within 30 days before or after the date of the loss sale

41. 41 Disallowed Losses (slide 4 of 5) Wash sales –Disallowed loss is added to the basis of the substantially identical stock or securities that caused the disallowance –Does not apply to gains realized on disposition of securities

42. 42 Disallowed Losses (slide 5 of 5) Personal use assets –Loss on the disposition of personal use assets is disallowed –Personal use asset loss cannot be converted into a business (or production of income) use deductible loss Original loss basis for an asset converted is the lower of personal use basis or FMV at date of conversion Cost recovery basis similarly limited

43. 43 Nontaxable Transactions (slide 1 of 4) In a nontaxable transaction, realized gain or loss is not currently recognized –Recognition is postponed to a future date (via a carryover basis) rather than eliminated

44. 44 Nontaxable Transactions (slide 2 of 4) In a tax-free transaction, nonrecognition of realized gain is permanent

45. 45 Nontaxable Transactions (slide 3 of 4) Holding period for new asset –The holding period of the asset surrendered in a nontaxable transaction carries over to the new asset acquired

46. 46 Nontaxable Transactions (slide 4 of 4) Depreciation recapture –Potential recapture from the asset surrendered carries over to the new asset acquired in the transaction

47. 47 Like-Kind Exchanges (slide 1 of 11) §1031 requires nontaxable treatment for gains and losses when: –Form of transaction is an exchange –Assets involved are used in trade or business or held for production of income However, inventory, securities, and partnership interests do not qualify –Asset exchanged must be like-kind in nature or character as replacement property

48. 48 Like-Kind Exchanges (slide 2 of 11) Like-kind property defined –Interpreted very broadly Real estate for real estate –Improved for unimproved realty qualifies –U.S. realty for foreign realty does not qualify Tangible personalty for tangible personalty –Must be within the same general business asset or product class –Personalty used mainly in the U.S. for personalty used mainly outside the U.S. does not qualify –Livestock of different sexes does not qualify

49. 49 Like-Kind Exchanges (slide 3 of 11) When taxpayers involved in an exchange are related parties –To qualify for nontaxable exchange treatment, related parties must not dispose of property exchanged within the 2 year period following exchange –If such early disposition occurs, postponed gain is recognized as of date of early disposition Dispositions due to death, involuntary conversions, and certain non-tax avoidance transactions are not treated as early dispositions

50. 50 Like-Kind Exchanges (slide 4 of 11) Exchange requirement –The transaction must involve a direct exchange of property to qualify as a like-kind exchange –If the exchange is a delayed (nonsimultaneous) exchange, there are time limits on its completion The new property must be identified within 45 days of date old property was transferred The new property must be received by the earlier of the following: –Within 180 days of date old property was transferred –The due date (including extensions) for tax return covering year of transfer

51. 51 Like-Kind Exchanges (slide 4 of 11) Exchange requirement –The transaction must involve a direct exchange of property to qualify as a like-kind exchange –If the exchange is a delayed (nonsimultaneous) exchange, there are time limits on its completion The new property must be identified within 45 days of date old property was transferred The new property must be received by the earlier of the following: –Within 180 days of date old property was transferred –The due date (including extensions) for tax return covering year of transfer

52. 52 Like-Kind Exchanges (slide 5 of 11) Boot –Any property involved in the exchange that is not like-kind property is “boot” –The receipt of boot causes gain recognition equal to the lesser of boot received (FMV) or gain realized No loss is recognized even when boot is received

53. 53 Like-Kind Exchanges (slide 6 of 11) Boot –The transferor of boot property may recognize gain or loss on that property Gain or loss is recognized to the extent of the difference between the adjusted basis and the fair market value of the boot

54. 54 Like-Kind Exchanges (slide 7 of 11) Basis in like-kind asset received: FMV of new asset – Gain not recognized + Loss not recognized = Basis in new asset Basis in boot received is FMV of property

55. 55 Like-Kind Exchanges (slide 8 of 11) Basis in like-kind property using Code approach Adjusted basis of like-kind asset given +Adjusted basis of boot given +Gain recognized –FMV of boot received –Loss recognized =Basis in new asset

56. 56 Like-Kind Exchanges (slide 9 of 11) Example of an exchange with boot: –Zak and Vira exchange equipment of same general business asset class –Zak: Basis = $25,000; FMV = $40,000 –Vira: Basis = $20,000; FMV = $30,000 –Vira also gives securities: Basis = $7,000; FMV = $10,000

57. 57 Like-Kind Exchanges (slide 10 of 11) Example (Cont’d) Zak Vira FMV Property Rec’d$30,000$40,000 +Securities 10,000 -0- Total FMV Rec’d$40,000$40,000 Less: Basis Property Given 25,000 30,000 * Realized Gain$15,000$10,000 Boot Rec’d$10,000$ -0- Gain Recognized$10,000$ -0- *$20,000 Equip. + $10,000 Securities = $30,000 Securities: ($10,000 FMV - $7,000 basis) = $3,000 gain recognized by Vira

58. 58 Like-Kind Exchanges (slide 11 of 11) Example (Cont’d) Zak Vira FMV Property Rec’d$30,000$40,000 Postponed Gain -5,000-10,000 Basis Property Rec’d$25,000$30,000

59. 59 Involuntary Conversions (slide 1 of 8) §1033 permits (i.e., not mandatory) nontaxable treatment of gains if the amount reinvested in replacement property ≥ the amount realized If the amount reinvested in replacement property is < amount realized, realized gain is recognized to the extent of the deficiency

60. 60 Involuntary Conversions (slide 2 of 8) Involuntary conversion –Results from the destruction, theft, seizure, requisition, condemnation, or sale or exchange under threat of condemnation of property A voluntary act by taxpayer is not an involuntary conversion

61. 61 Involuntary Conversions (slide 3 of 8) §1033 requirements –Replacement property must be similar or related in service or use as involuntarily converted property –Replacement property must be acquired within a specified time period

62. 62 Involuntary Conversions (slide 4 of 8) Replacement property defined –Must be similar or related in service or use as the converted property Definition is interpreted very narrowly and differently for owner-investor than for owner-user –For business or investment real estate that is condemned, replacement property has same meaning as for like-kind exchanges

63. 63 Involuntary Conversions (slide 5 of 8) Taxpayer use test (owner-investor) –The properties must be used by the owner in similar endeavors Example: Rental apartment building can be replaced with a rental office building because both have same use to owner (the production of rental income)

64. 64 Involuntary Conversions (slide 6 of 8) Functional use test (owner-user) –The property must have the same use to the owner as the converted property Example: A manufacturing plant is not replacement property for a wholesale grocery warehouse because each has a different function to the owner-user

65. 65 Involuntary Conversions (slide 7 of 8) Time period for replacement –Replacement time period starts when involuntary conversion or threat of condemnation occurs –Replacement time period ends 2 years (3 years for condemnation of realty) after the close of the taxable year in which gain is realized

66. 66 Involuntary Conversions (slide 8 of 8) Example of time period for replacement –Taxpayer’s office building is destroyed by fire on November 4, 2011 –Taxpayer receives insurance proceeds on February 10, 2012 –Taxpayer is a calendar-year taxpayer –Taxpayer’s replacement period is from November 4, 2011 to December 31, 2014

67. 67 The Big Picture - Example 37 Involuntary Conversion (slide 1 of 3) Alice’s business building (adjusted basis $50,000) is destroyed by fire on October 5, 2015. –Alice is a calendar year taxpayer. On November 17, 2015, she receives an insurance reimbursement of $100,000 for the loss. –Alice invests $80,000 in a new building. –Alice uses the other $20,000 of insurance proceeds to pay off credit card debt.

68. 68 The Big Picture - Example 37 Involuntary Conversion (slide 2 of 3) Alice has until December 31, 2017, to make the new investment and qualify for the nonrecognition election. Alice’s realized gain is $50,000 –$100,000 insurance proceeds received − $50,000 adjusted basis of old building Assuming that the replacement property qualifies, Alice’s recognized gain is $20,000. –$100,000 insurance proceeds − $80,000 reinvested

69. 69 The Big Picture - Example 37 Involuntary Conversion (slide 3 of 3) Alice’s basis in the new building is $50,000. –This is the building’s cost of $80,000 less postponed gain of $30,000 $50,000 realized gain − $20,000 recognized gain. For this $30,000 of realized gain to be postponed, Alice must elect § 1033 deferral treatment.

70. 70 The Big Picture - Example 38 Involuntary Conversion Assume the same facts as in the previous example, except that Alice receives only $45,000 of insurance proceeds. –She has a realized and recognized loss of $5,000. –The basis of the new building is the building’s cost of $80,000.

71. 71 Other Nonrecognition Provisions (slide 1 of 7) Several additional nonrecognition provisions are available: –Under § 351, taxpayers can transfer assets to corporations in exchange for stock without recognizing gain or loss –A similar provision (§ 721) allows the nontaxable transfer of assets to a partnership in exchange for a partnership interest

72. 72 Other Nonrecognition Provisions (slide 2 of 7) Under §1032, a corporation does not recognize gain or loss on the receipt of money or other property in exchange for its stock (including treasury stock)

73. 73 Other Nonrecognition Provisions (slide 3 of 7) Under §1035, no gain or loss is recognized from the exchange of certain insurance contracts or policies

74. 74 Other Nonrecognition Provisions (slide 4 of 7) Under §1036, a shareholder does not recognize gain or loss on the exchange of common stock for common stock or preferred stock for preferred stock in same corporation

75. 75 Other Nonrecognition Provisions (slide 5 of 7) Under §1044, if the amount realized from the sale of publicly traded securities is reinvested in common stock or a partnership interest of a specialized small business investment company, realized gain is not recognized –Amounts not reinvested will trigger recognition of gain to extent of deficiency –Statutory limits are imposed on the amount of gain qualified for this treatment –Only individuals and C corporations qualify

76. 76 Other Nonrecognition Provisions (slide 6 of 7) §121 provides for exclusion of up to $250,000 of gain on the sale of a principal residence ($500,000 on joint return) Taxpayer must own and use as principal residence for at least 2 years during the 5 year period ending on date of sale

77. 77 Other Nonrecognition Provisions (slide 7 of 7) Under §1041, transfers of property between spouses or former spouses incident to divorce are nontaxable

78. 78 Refocus On The Big Picture (slide 1 of 6) Alice’s basis in the land acquired as a gift is a carryover basis of $2,000. –If Alice sells the land outright, she will realize and recognize a gain of $48,000. However, if she replaces the property with other real property, she should be able to qualify for favorable like-kind exchange treatment under § 1031 and defer the gain on the property disposition. –However, if Alice receives any cash from the exchange, realized gain would be recognized to the extent of the cash (boot) received.

79. 79 Refocus On The Big Picture (slide 2 of 6) Alice’s basis in the 300 shares of stock received as an inheritance is the property’s $30,000 fair market value at the date of death. –If Alice sells the 300 shares, she will realize and recognize a $6,000 gain. $36,000 sales price (300 shares X $120) - $30,000 basis. Alice’s basis in the 200 shares of stock purchased is her purchase price of $28,000. –Those shares are currently worth $24,000 (200 shares X $120). –Consequently, if she sells those shares, she will realize and recognize a $4,000 loss.

80. 80 Refocus On The Big Picture (slide 3 of 6) You advise Alice that her basis in the house is its $475,000 fair market value on the date of her grandmother’s death. –If Alice sells the house for $600,000, her realized and recognized gain would be $125,000.

81. 81 Refocus On The Big Picture (slide 4 of 6) Regarding the involuntary conversion of Alice’s business building, a $50,000 realized gain occurs upon the receipt of the $100,000 of insurance proceeds. –Because she intends to invest only $80,000 of the insurance proceeds in a qualifying property, Alice’s recognized gain is $20,000. She reinvested $20,000 less than the insurance proceeds received ($100,000 proceeds - $80,000 reinvested). –Therefore, her realized gain is recognized to that extent

82. 82 Refocus On The Big Picture (slide 5 of 6) What If? Alice is leaning toward selling the house. However, she knows that her grandmother would not want her to have to pay income taxes on the sale. Alice asks whether there is any way that she could avoid paying taxes on the sale. You inform Alice of the exclusion provision under § 121. –Alice can qualify for this exclusion of up to $250,000 of realized gain if she owns and occupies the house as her principal residence for at least 2 of the 5 years prior to a sale.

83. 83 Refocus On The Big Picture (slide 6 of 6) What If? From a tax planning perspective, what could Alice have done so that none of the $50,000 of realized gain in Example 37 from the involuntary conversion was recognized? –Alice would have to reinvest all of the $100,000 of insurance proceeds received in another qualified building. Under this circumstance, the basis of the replacement building would be $50,000. –$100,000 cost of replacement building – $50,000 deferred gain.

84. © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 84 If you have any comments or suggestions concerning this PowerPoint Presentation for South-Western Federal Taxation, please contact: Dr. Donald R. Trippeer, CPA trippedr@oneonta.edu SUNY Oneonta