Ross would like to dispose of some land he acquired five years ago because he believes it will not continue to appreciate. Its value has increased by $50,000 over the five-year period. He also intends to sell stock that has declined in value by $50,000 during the eight-month period he has owned it.
Ross has four offers to acquire the stock and land.
Buyer 1:Exchange land.Buyer 2:Purchase land for cash.Buyer 3:Exchange stock.Buyer 4:Purchase stock for cash.
Classify each of the following as either "True" or "False" regarding Ross's tax issues relevant to disposing of this land and stock.
a.Only the exchange of the land qualifies for § 1031 deferral treatment.
TrueFalse
b.Whether he sells or exchanges the stock, the loss is not deferred.
TrueFalse
c.If he sells the stock, Ross may want to sell the land as well, so that the recognized gain from the land can be offset by the recognized loss on the stock.
TrueFalse
d.Both the land and the stock qualify for § 1031 treatment, so Ross may defer the loss on the stock and the gain on the land.
TrueFalse