P1-U08 · PART 1 · SOURCE CYCLE 2026-2027
Nonrecognition Property Transactions
How to complete this unit
This unit uses 11 source-gated recall cards and 12 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 12 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 1 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.What property can qualify for section 1031 like-kind nonrecognition?
Real property held for investment or productive use in a trade or business; property held primarily for sale does not qualify.
Q2.What is the general replacement period for a condemnation involuntary conversion?
It generally ends two years after the close of the first tax year in which any gain is realized, subject to exceptions.
Q3.Recall the rule for this EA objective in Income And Assets: Sale of a personal residence (e.g., IRC sec 121 exclusions)
$250,000
Q4.Recall the rule for this EA objective in Income And Assets: Installment sales (e.g., related parties, original cost, date of acquisition, possible recalculations and recharacterization)
A sale in which at least one payment is received after the tax year of sale
Q5.What is the basic section 121 home-sale exclusion?
an eligible taxpayer may exclude gain on the sale of a principal residence up to the applicable dollar limit ownership and use tests generally require two years out of the five years ending on the sale date only one exclusion is generally allowed in a two-year period, subject to limited partial-exclusion exceptions
Q6.What property generally qualifies for a section 1031 like-kind exchange?
only real property held for productive use in a trade or business or for investment personal-use property does not qualify real property in the United States and real property outside the United States are not like-kind to each other
Q7.What is the basic involuntary-conversion nonrecognition idea under section 1033?
gain may be deferred when property is compulsorily or involuntarily converted into similar property or into money used to purchase replacement property within the replacement period the replacement property must be similar or related in service or use, with special rules for certain business/investment real property basis of the replacement property is reduced by deferred gain
Q8.Why can related-party issues affect nonrecognition transactions?
related-party sales can disallow losses even when a nonrecognition label is claimed incorrectly section 1031 has special related-party timing and disposition traps section 121 has lookback and eligibility limits that related ownership changes can affect
Q9.Grady exchanges his residential rental property with an adjusted basis of $50,000 and an FMV of $80,000 for 10 acres of undeveloped land with an FMV of $80,000. He plans to hold the land as an investment. What is Grady's basis in the land after this Section 1031 exchange?
$50,000
Q10.Which of the following transactions does not qualify for a Section 1031 like-kind exchange?
An exchange of a home developer's inventory for a house flipper's housing inventory.
Q11.Which form might be received by a taxpayer who has sold their primary residence?
Form 1099-S
Ready to move on?
- ▸ Explain at least 80% of these 11 rules without opening the answer, twice on different days.
- ▸ Score 80% across 12 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 1 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.