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?
| Land | Machine | |
| Amount Realized | 15,000.00 | 78,000.00 |
| Adjusted Basis | (10,000.00) | (85,000.00) |
| Realized Gain(Loss) | 5,000.00 | (7,000.00) |
| Recognised Gain(Loss) | 5,000.00 | 0 |
The realized loss on the like-kind exchange part of the
transaction i.e the machines is not recognized.
The realized gain on the land is recognized.
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