Question

Required information Problem 11-56 (LO 11-6) [The following information applies to the questions displayed below.) Kase, an individual, purchased some property in Potomac, Maryland, for $158,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase's Maryland property. Kase agrees to the exchange. What is Kase's realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Problem 11-56 Part-a a. The transaction qualifies as a like-kind exchange and the fair market value of each property is $740,000. Adjusted basis in new property

Answer 1

ANSWER:

(a).

Even though Kase has a realized gain of $582,000, the recognized gain is $0 because the transaction qualifies as a like-kind exchange and Kase did not receive any boot. Kase receives a carryover basis of $158,000 in the North Carolina property (the same basis Kase had in the Maryland property).

S.No.	Description	Amount ($)	Explanation
1	Amount realized from machine	740,000	Given
2	Amount realized from boot (non like-kind property)	0
3	Total amount realized	740,000	1 + 2
4	Adjusted basis	158,000	Given
5	Gain realized	582,000	3 - 4
6	Gain recognized	0	Lesser of 2 or 5
7	Deferred gain	582,000	5 - 6
	Adjusted basis in new property	158,000	1 - 7

_____________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************