Brad Johnson owned a parcel of investment real estate that had an adjusted basis

Question

Brad Johnson owned a parcel of investment real estate that had an adjusted basis of $25,000 and a fair market value of $40,000. During 2015, Johnson exchanged his investment real estate for the items of property listed below.

Land to be held for investment (fair market value) $35,000

A small sailboat to be held for personal use (fair market value) 3,000

Cash 2,000

What is Johnson's recognized gain and basis in his new investment real estate?

Please show all work and explain how you got the answer. Don't copy other peoples answers please.

Explanation / Answer

Adjusted basis value = $25,000

Total consideration received

= 35,000 + 3,0000 + 2,000

= 40,000

Recogonized gain is = 40,000 - 25,000

= $15,000

Basis in the new investment would be the cost to acquire which is $35,000

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