Question

On October 1, Shelly exchanged an apartment building (adjusted basis of $775,000, fair market value of...

On October 1, Shelly exchanged an apartment building (adjusted basis of $775,000, fair market value of $850,000) for another apartment building owned by Brian (fair market value of $575,000 and subject to an assumable mortgage of 225,000) and $50,000 cash. The property transfers were made subject to the outstanding mortgage.

What is Shelly's realized gain, recognized gain, and new basis?

Homework Answers

Answer #1

Realised gain = total compensation- cost basis(or adjusted basis)
=575,000+225,000+50,000-775,000
=75,000.

Recognized Gain= gain from the appreciation of asset,i.e; difference between the cost price and selling price of an asset. ( sort of capital gain)
=850,000( fair value of the property)- 775,000( adjusted basis)
=75,000
NEW Basis= 850,000( the new cost of acquisition , becomes the basis for any further calculation)

PLEASE LIKE THE ANSWER IF YOU FIND IT HELPFUL OR YOU CAN COMMENT IF YOU NEED CLARITY / EXPLANATION ON ANY POINT.

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
3. Mary owns an apartment building that has an adjusted basis of $1,080,000 but subject to...
3. Mary owns an apartment building that has an adjusted basis of $1,080,000 but subject to a mortgage of $320,000. Mary transfers the apartment building to Gary, and receives from Gary $230,000 in cash and an office building with a fair market value of $880,000 at the time of the exchange. Gary assumes the $320,000 mortgage on the apartment. The transfer is a like-kind exchange. a) what is Mary’s realized gain/ loss? b) what is Mary’ recognized gain/loss? c) what...
Jenny transferred a factory building with an adjusted basis of $70,000 and a fair market value...
Jenny transferred a factory building with an adjusted basis of $70,000 and a fair market value of $110,000 to the Crystal Corporation in exchange for 100% of Crystal Corporation stock and $20,000 cash. The building was subject to a mortgage of $25,000, which Crystal Corporation assumed. The fair market value of the stock was $75,000. Which are the amounts of Jenny's realized gain and recognized gain?
Allen Aubrey exchanges his factory (adjusted basis of $339,000 and fair market value of $525,000) for...
Allen Aubrey exchanges his factory (adjusted basis of $339,000 and fair market value of $525,000) for an apartment building with a fair market value of $360,000. He also receives $165,000 in cash. What is his realized and recognized gain or loss? Determine the basis of his apartment building using two different methods.
Sandy owns a building which she uses in her manufacturing business with an adjusted basis of...
Sandy owns a building which she uses in her manufacturing business with an adjusted basis of $375,000 and a $800,000 fair market value. She exchanges her building with a building owned by Mitch. Mitch's building has a $1,050,000 fair market value and is subject to a mortgage of $250,000 which Sandy assumes as part of the transaction. Calculate Sandy's: (1) realized gain, (2) recognized gain, & (3) basis for the building received.
Jake Corp. exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by...
Jake Corp. exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by Tiger Corporation valued at $350,000 (adjusted basis = $200,000) and $50,000 cash. In addition, Jake Corp. assumed the $150,000 mortgage on Tiger’s building. What are Jake’s and Tiger’s recognized gain or loss, respectively? A 0, 0 B. $50,000, $100,000 C. $50,000, $150,000 D. $75,000, $150,000
Roy exchanges a business building (adjusted basis of $130,000, FMV of $160,000) for a building with...
Roy exchanges a business building (adjusted basis of $130,000, FMV of $160,000) for a building with a fair market value of $110,000 and an adjusted basis of $40,000 from Idea Corporation. In addition, Roy receives equipment with a fair market value of $50,000 (adjusted basis of $35,000) from Idea Corp. What is the realized gain or loss for Roy? What is the recognized gain or loss for Roy? What is Roy’s basis in the new building? What is Idea’s realized...
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?
Bob transferred property that had an adjusted basis to him of $40,000 and a fair market...
Bob transferred property that had an adjusted basis to him of $40,000 and a fair market value of $50,000 to Corporation Z in exchange for 100% of Z's only class of stock and $15,000 cash. At the time of the transfer the stock had a fair market value of $35,000. What is the amount of gain to be recognized by Bob?
2. Bud exchanges a business use machine with an adjusted basis of $22,000 and a fair...
2. Bud exchanges a business use machine with an adjusted basis of $22,000 and a fair market value of $30,000 for another business use machine with a fair market value of $28,000 and $2,000 cash. a. What is his realized gain/loss? b. What is his recognized gain/loss? c. What is his basis in the new property?
Fact Pattern for Questions 12 and 13: Sandra owned a rental apartment building in her sole...
Fact Pattern for Questions 12 and 13: Sandra owned a rental apartment building in her sole name for four years. After her business advisors suggested that she conduct her rental activity in corporate form, she promptly transferred the apartment building to ABC Rental Corporation, a newly formed corporation. Sandra received all of the stock of ABC Rental Corporation in exchange for the apartment building. At the time of the transfer of the apartment building to ABC Rental Corporation, Sandra’s adjusted...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT