Which of the following situations involving an exchange of business property exe

Question

Which of the following situations involving an exchange of business property exemplifies a fully nontaxable exchange ? Giving up a machine and $5,000 for another machine; giving up a machine for another machine and $5,000; giving up a truck for a machine; giving up a lot for another lot and the other person pays $2,000 expense of the exchange. Which of the following situations involving an exchange of business property exemplifies a fully nontaxable exchange ? Giving up a machine and $5,000 for another machine; giving up a machine for another machine and $5,000; giving up a truck for a machine; giving up a lot for another lot and the other person pays $2,000 expense of the exchange.

Explanation / Answer

The situation involving an exchange of business property exemlifies a fully non taxable exchange is giving up a machine and $ 5000 for another machine becauseno gain or loss is recognized on the exchange if you pay money or give up other for a different property in a like-kind exchange, but your basis in the new property is your basis in the like-kind property you give up plus the money you pay and the value of the other property you give.

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