Question

eBook Calculator Problem 7-27 (Algorithmic) (LO. 5) Sarah exchanges a building and land (used in its business) for Tyler's land and building and some equipment (used in its business). The assets have the following characteristics: Fair Market Value Sarah's real property Adjusted Basis $6,960 3,480 3,132 Tyler's real property Equipment $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 $ . Her adjusted basis in the land and building she acquired from Tyler is and her adjusted basis in the equipment is $ b. What are Tyler's recognized gain or loss and basis for the land and building acquired from Sarah? Tyler's recognized is $ and his adjusted basis in the land and building he acquired from Sarah is $

Answer 1

Ans:

Particulars	Amount($)
FMV of land and Building Received	13,920
Equipment boot Received	5,220
Less: Basis in her own property	(6,960)
Realized Gain	12,180
Sarah recognized Gain {Equipment}	5,200

Note: In case of Equipment received, Gain will be recognized lower of realized gain or the amount of equipment

A). Sarah Basis in new land And Equipment Acquired { Adjusted basis of Sarah Real Property}= 6,960

Adjusted basis in the equipment received will be the equipment Acquired=5,220

particulars	Amount($)
FMV of land and building received	17,400
Less: Mortgage	0
Less: Equipment paid	(3,132)
Less: Basis in own property	(3,480)
Realized gain by Tyler	10,788
Tyler Recognized gain {5,220-3,132}	2,088

Tyler basis in new building and land acquired= {3,480+5,220}

=> 8,700