Question

**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?**

Answer #1

a) What is Sammy's recognized gain or loss

Amount realised

Particular | Amount |

Property received | $43,000 |

Cash received | $5000 |

Liability assumed by other | $12,000 |

Total (a) | $60,000 |

Adjusted basis value of land (b) | $44,000 |

Realised gain (a-b) | $16,000 |

Recognized gain is lower of cash received plus liability assumed by other (i.e $5000+$12,000=$17,000) and realised gain i.e $16,000. So the recognised gain will be $16,000

b) Sammy basis for the assets he received

Particular | Amount |

Cash received | $5,000 |

Liability assumed by other | $12,000 |

total (A) | $17,000 |

Adjusted basis for the asset given up (B) | $44,000 |

Recognised gain(C) as per answer in part a | $16,000 |

Total (B+C-A) | $43,000 |

Please let me know if you have any further query

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FMV of Boot Received
FMV of Land Received
$225,000
$-0-
$500,000
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liabilities by one party to the exchange results in boot received
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C....

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payoff of liabilities by one party to the exchange results in boot
received by the other party.
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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....

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c.$0
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