Question

Problem 13-71 (Algorithmic) (LO. 6) Sarah exchanges a building and land (used in her business) for Tyler's land and building and some equipment (used in his business). The assets have the following characteristics: Sarah's real property Tyler's real property Equipment Adjusted Basis $6,960 3,480 3,132 Fair Market Value $17,400 13,920 5,220 a. What are Sarah's recognized gain or loss and basis for the land and building and equipment acquired from Tyler? Her recognized is s . Her adjusted basis in the land and building she acquired from Tyler is and her adjusted basis in the equipment is s b. What are Tyler's recognized gain or loss and basis for the land and building acquired from Sarah? Tyler's recognized , and his adjusted basis in the land and building he acquired from Sarah is

Answer 1

Answer-a:

FMV of Land & building received	13,920
Equipment received	5,220
Less: Basis in own property	-6,960
Realized gain	12,180
Sarah's recognized gain (boot)	5,220

Sarah’ Basis in new land & building acquired (Carryover basis of original asset) = $6,960

Sarah’s adjusted basis in equipment acquired (gain recognized) = $5,220

Answer-b:

FMV of Land & building received	17,400
Less: Equipment paid	-3,132
Less: Basis in own property	-3,480
Realized gain	10,788
Tyler's recognized gain (5,220 - 3,132)	2,088

Tyler’s Basis in new land & building acquired (Carryover basis + FMV boot paid) = $8,700