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Property: Basis and Nontaxable Exchanges 10-29 22. Like-Kind Exchange. (Obj. 4)

ID: 2571243 • Letter: P

Question

Property: Basis and Nontaxable Exchanges 10-29 22. Like-Kind Exchange. (Obj. 4) For each of the following like-kind exchanges, compute th taxpayer's realized and recognized gain or loss, as well as the basis of the new property acquired. Basis of Old Asset $ 8,000 6,000 6,000 10,000 10,000 10,000 FMV of New Asset $5,000 10,000 10,000 7,000 7,000 11,000 Cash Exchanged a. b. C. d. e. f. $0 $5,000 paid $2,000 paid $2,000 received $5,000 received $2,000 received 23. Like-Kind Exchange. (Obj. 4) Bufford wants Jack's farm as a site for an amusement park and fford is now considering acquiring another farm for $180,000 and then offers him $200,000 for the farm. Jack does not want to sell his farm, which has a basis to Jack of $50,000. Bu offering that farm plus $20,000 to Jack in exchange for his farm. If Jack accepts this offer, what are the tax consequences?

Explanation / Answer

22.

Gain/ (Loss) = FMV of new asset- Basis of old asset - Cash paid + Cash received

Basis of new asset = Basis of old asset + Cash paid - Cash received

Basis of old asset FMV of new asset Cash Received/(paid) Gain/(Loss) Basis of new property a 8,000 5,000 0 (3,000) 8,000 b 6,000 10,000 (5,000) (1,000) 11,000 c 6,000 10,000 (2,000) 2,000 8,000 d 10,000 7,000 2,000 (1,000) 8,000 e 10,000 7,000 5,000 2,000 5,000 f 10,000 11,000 2,000 3,000 8,000