Question

-Szymon exchanges land held as an investment with a $75,000 basis for other land with a $80,000 FMV and a speed boat with a $20,000 FMV. The acquired land is to be held for investment and the speed boat is for personal use. What is the amount of recognized gain?

A) $0

B) $10,000

C) $20,000

D) $30,000

-Pamela owns land for investment purposes. The land is worth $450,000 (basis of $400,000 to Pamela). Pamela exchanges the land, plus $50,000 cash, for a warehouse to be used in her business. The FMV of the warehouse is $575,000, but the warehouse is subject to a mortgage of $75,000, which is assumed by Pamela. Pamela must recognize a gain of

A) $0.

B) $50,000.

C) $125,000.

D) $150,000.

-Steve exchanges farmland (adjusted basis $160,000) for other farmland that has a FMV of $140,000. Steve also receives $30,000 cash. Steve's basis in the new farmland is

A) $130,000.

B) $140,000.

C) $160,000.

D) $170,000.

Answer 1

Answer 1 Correct option C : $ 20,000 $20,000 shall be recognized gains explanation Realized gain =80000+20000-75000 = 25000 Recognized gain = Lesser of $ 25,000 (realized gain) or $ 20,000 ( FMV of boat given in question) = $ 20,000

Answer 2 Correct Option is A : $ 0 explanation Pamela exchanged a like-kind property.Pamela received nothing ,so NO gain is recognized.

Answer 3 Correct option is B: $ 140,000 explanation The gained realized = FMV + Cash - Cost = $140,000+$30,000-$160,000 = $ 10,000 The basis of new equipment i.e $160,000 ( old basis ) + gain ( $10,000) =$140,000 of the FMV of the property received less unrecognized gain of $ 0 =$140,000 So the option is B : $140,000