Question

Terence, an individual, purchased some property in Sacramento, California, for $242,000 approximately 5 years ago. Terence...

Terence, an individual, purchased some property in Sacramento, California, for $242,000 approximately 5 years ago. Terence exchanges his a parcel of land in Sacramento for another piece of land in Folsom, Califonria.

What is Terence’s realized gain or loss, recognized gain or loss, and basis in the Folsom 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.)

b. The transaction qualifies as a like-kind exchange and the fair market value of each property is $202,000.


     

Homework Answers

Answer #1

No.

Description

Amount (in $)

1.

Amount realized from property (FMV)

202,000

2.

Amount realized from exchange

0

3.

Total amount realized (1 + 2)

202,000

4.

Adjusted basis

242,000

5.

Loss realized (3 – 4)

(40,000)

6.

Loss recognized (Less of 2 or 5)

0

7.

Deffered Loss (5 – 6)

40,000

8.

Adjusted basis in new property

242,000

*Terence has a Realised Loss of $ - (40,000) & Recognised Loss of $0 as it is a like-kind exchange.

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