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9. You want to transfer land with an adjusted basis of $110,000 and a fair marke

ID: 2437475 • Letter: 9

Question

9. You want to transfer land with an adjusted basis of $110,000 and a fair market value of $120,000 in a like-kind exchange. As replacement property you will receive land from Chuck that is like-kind to the one you will transfer. However, Charlie’s land has a fair market value of only $80,000. To equalize the value of the like-kind properties being exchanged, Charlie will give you $40,000 in cash. Compute your gain: ______________________________________________

10. G&G Inc. transferred (1) Land A which had a $150,200 adjusted tax basis plus (2) $25,000 cash in exchange to an intermediary. Within the required time period G&G Inc. received a Land B worth $350,000. What is the tax basis in Land B in the hands of G&G Inc.? ___________________________________

Explanation / Answer

Answer 9

FMV of like-kind land received................. ...$80000

+ cash received.................................... ......... $40000

amount realized............................... ..............$120000

– adjusted basis of the land transferred...... $110000

Realized gain.....................................................$10,000

Answer 10.

the tax basis in Land B in the hands of G&G Inc. is $350,000.