Question

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 Tyler's real property Equipment Adjusted Basis $120,000 60,000 50,000 $300,000 220,000 80,000 a. What are Sarah's recognized gain or loss and basis for the land and building and equipment acquired from Tyler? Her recognized gain is $ x. Her adjusted basis in the land and building she acquired from Tyler is x, and her adjusted basis in the equipment is $ Feedback Check My Work If the taxpayer in a like-kind exchange gives or receives some property that is not like-kind property, recognition may occur. b. What are Tyler's recognized gain or loss and basis for the land and building acquired from Sarah? Tyler's recognized gain is $ x, and his adjusted basis in the land and building he acquired from Sarah is x

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Answer 1

SARAH RECOGNIZED GAIN AND IT IS $ 10000. HER ADJUSTED BASIS IN THE LAND AND BUILDING SHE ACQUIRED FROM THE TYLER IS 160000, AND HER ADJUSTED BASIS IN THE EQUIPMENT IS 30000.

CALCULATION

LAND AND BUILDING ACQUIRED FROM THE TYLER = 220000-60000=160000

EQUIPMENT ACQUIRED FROM THE TYLER ADJUSTED BASIS= 80000-50000=30000

FAIR MARKET VALUE (TOTAL) =220000+80000= 300000

   =300000- (160000+30000) =300000-190000= 110000

LAND AND BUILDING ACQUIRED FROM THE SARAH =300000-120000=180000

   =300000-180000=120000

GAIN =120000-110000 =10000

TYLER'S RECOGNIZED GAIN IS $10000 AND HIS ADJUSTED BASIS IN THE LAND AND BUILDING HE ACQUIRED FROM SARAH IS 180000.

CALCULATION

LAND AND BUILDING ACQUIRED FROM THE SARAH =180000

LAND AND BUILDING AND EQUIPMENT ACQUIRED FROM THE TYLER =190000

GAIN =190000-180000=10000