Question

Problem 13-80 (LO. 6) Shontelle owns an apartment house that has an adjusted basis of $760,000 but is subject to a mortgage of $192,000. She transfers the apartment house to Dave and receives from him $120,000 in cash and an office building with a fair market value of $780,000 at the time of the exchange. Dave assumes the $192,000 mortgage on the apartment house. a. What is Shontelle's realized gain or loss? Shontelle's realized is $ b. What is Shontelle's recognized gain or loss? Her recognized iss C. What is the Shontelle's basis in the newly acquired office building? Her basis in the newly acquired office building is $

Answer 1

Solution VA Dealized gain = Amount realized- Adjusted basis = (120000 + 78000D + 1920001760000 = 1092 000 - 760000 = $ 332000 shontelle's realized gain is $352000. b) Recognized gain = cash + mootgage = 120000+192000 = $ 312.000 gain is $312000 Her recognized c) Basis of newly acquired building = falt market = = = value of building - Excess of realized gain 780000-(332.000-3)2000) 780000 - 20000 $ 750 000 Her basis for the newly acquired office building is $760000