Under the Like-Kind Exchange Rules, When Like-Kind Property Is Traded

question 55

Multiple Choice

Under the like-kind exchange rules, when like-kind property is traded for like-kind property, a loss on a trade-in is:

• A)recognized and treated as a capital loss.
• B)recognized and treated as an ordinary loss.
• C)not recognized and increases the basis of the replacement property.
• D)not recognized and decreases the basis of the replacement property.
• E)none of the above.

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Definitions:

Fluid Intelligence

The ability to reason and solve new problems independently of previously acquired knowledge.

Crystallized Intelligence

The ability to use learned knowledge and experience, which typically increases or remains stable over the lifespan.

Diverge

To move or extend in different directions from a common point, or to differ in opinion or character.

Converge

To move towards one point from different places or ideas; to come together and meet or unite in a point or purpose.