Question

2019-Carey exchanges land for other land in a qualifying like-kind exchange. Carey's basis in the land...

2019-Carey exchanges land for other land in a qualifying like-kind exchange. Carey's basis in the land given up is $115,000, and the property has a fair market value of $150,000. In exchange for her property, Carey receives land with a fair market value of $100,000 and cash of $10,000. In addition, the other party to the exchange assumes a mortgage loan on Carey's property of $40,000.

a.Calculate Carey's recognized gain, if any, on the exchange__________

Feedback Although a taxpayer realizes a gain or loss on the sale or exchange of property, the recognition of the gain or loss may be deferred for tax purposes. One example of such a situation arises when a taxpayer exchanges real property for other real property of a like kind. To qualify as a nontaxable exchange, the property exchanged must be real property held for productive use in a trade or business or for investment.

b. Calculate Carey's basis in the property received._________

Homework Answers

Answer #1

a)

Calculation of Carey's recognized gain on the exchange:

Particulars Amount
Fair market value of property received 100,000
Cash received 10,000
Liability assumed by other party 40,000
Total amount realized 150,000
less: The adjusted basis of property given up 115,000
Gain realized 35,000

Calculation of boot received:

Details Amount
Cash received 10,000
Liability assumed by other party 40,000
Total boot received 50,000

Gain echange to be recognized as the gain realized of 35,000 because it is less than the total boot received.

b)

Calculation of Carey's basis in the property received:

Particulars Amount
Basis of property given up 115,000
Add: Boot paid -
Less: Boot received 50,000
Add: gain realized 35,000
Basis of property received 100,000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sam exchanges real estate for other real estate in a qualifying like-kind exchange. Sam’s basis in...
Sam exchanges real estate for other real estate in a qualifying like-kind exchange. Sam’s basis in the real estate given up is $120,000, and the property has a fair market value of $165,000. In exchange for his property, Sam receives real estate with a fair market value of $100,000 and cash of $15,000. In addition, the other party to the exchange assumes a mortgage loan on Sam’s property of $50,000. What is Sam's recognized gain, if any, on the exchange?...
Sammy exchanges land used in his business in a like-kind exchange. The property exchanged is as...
Sammy exchanges land used in his business in a like-kind exchange. The property exchanged is as follows: Property Surrendered Adj. Basis FMV Land $ 44,000 $ 60,000 Cash Liability on land $ 12,000 $ 12,000 The other party assumes the liability. Property Received Adj. Basis FMV $ 50,000 $ 43,000 $ 5,000 $ 5,000 a. What is Sammy's recognized gain or loss? b. What is Sammy's basis for the assets he received?
Fred and Sarajane exchanged land in a qualifying like-kind exchange. Fred gives up land with an...
Fred and Sarajane exchanged land in a qualifying like-kind exchange. Fred gives up land with an adjusted basis of $11,000 (fair market value of $16,000) in exchange for Sarajane's land with a fair market value of $12,000 plus $4,000 cash. How much gain should Fred recognize on the exchange? a.$5,000 b.$1,000 c.$0 d.$4,000 e.None of these choices are correct
Describe the like-kind property requirements for real property for purposes of qualifying for a like-kind exchange....
Describe the like-kind property requirements for real property for purposes of qualifying for a like-kind exchange. Explain whether land held for investment by a corporation will qualify as like-kind property with land held by an individual for personal use.
a taxpayer exchanges real property in which his basis was $100,000 for like kind property worth...
a taxpayer exchanges real property in which his basis was $100,000 for like kind property worth $80,000 plus $40000 in cash, what amount of gain is recognized?
Molly exchanges a small machine (adjusted basis of $85,000; fair market value of $78,000) used in...
Molly exchanges a small machine (adjusted basis of $85,000; fair market value of $78,000) used in her business and investment land (adjusted basis of $10,000; fair market value of $15,000) for a large machine (fair market value of $93,000) to be used in her business in a like-kind exchange. What is Molly’s realized gain/loss on the land and machine? What is Molly’s recognized gain/loss on the land and machine?
Question Which of the following statements is false? A. In a like-kind exchange under IRC§1031, the...
Question Which of the following statements is false? A. In a like-kind exchange under IRC§1031, the assumption or payoff of liabilities by one party to the exchange results in boot received by the other party. B. If boot is received in a §1031 like-kind exchange and gain is recognized, the following formula correctly calculates the basis of the like-kind property received: the fair market value of like-kind property received, less any gain NOT recognized (less deferred or postponed gain). C....
Question Which of the following statements is false? A. In a like-kind exchange under IRC§1031, the...
Question Which of the following statements is false? A. In a like-kind exchange under IRC§1031, the assumption or payoff of liabilities by one party to the exchange results in boot received by the other party. B. If boot is received in a §1031 like-kind exchange and gain is recognized, the following formula correctly calculates the basis of the like-kind property received: the fair market value of like-kind property received, less any gain NOT recognized (less deferred or postponed gain). C....
Herman exchanges his apartment complex for Heidi’s farm, and the exchange qualifies as a like-kind exchange....
Herman exchanges his apartment complex for Heidi’s farm, and the exchange qualifies as a like-kind exchange. Herman’s adjusted basis for the apartment complex is $600,000 and the complex is subject to a $180,000 liability. The fair market value of Heidi’s farm is $770,000, and the farm is subject to a $100,000 liability. How much, if any, is Herman’s recognized gain and his basis in the farm?
1.  . In 2014, Penny exchanges an investment property in Santa Barbara with a mountain view for...
1.  . In 2014, Penny exchanges an investment property in Santa Barbara with a mountain view for a lot with an ocean view in a qualifying like-kind exchange. Penny's basis in the land given up is $100,000 and the property has a fair market value of $250,000. Penny also pays $20,000 to the other party as part of the transaction. In exchange for her property and cash, Penny receives land with a fair market value of $270,000. a. Calculate Penny's recognized...