Question

# Gary exchanged land held for investment worth \$154,350 with an adjusted basis of \$110,880 and no...

Gary exchanged land held for investment worth \$154,350 with an adjusted basis of \$110,880 and no liabilities for Sharon's rental condominium worth \$141,750 which had an adjusted basis of \$153,090. Sharon also transferred to Gary's \$12,600 worth of stock in which she had an adjusted basis of \$11,025. Compute the realized and recognized gain or loss and the adjusted basis in the properties received for Gary and Sharon.

• Orignal value of Investment = \$154,350
• Adjusted basis value of Investment = \$110,880

Realized Gain/ Loss on Investment = Original value - Adjusted value = 154,350 - 110,880 = \$43,470 ......(a)

• Original value of rental condominium = \$141,750
• Adjusted value of Rental condominium = \$153,090

Realized Gain/ Loss on Rental condominium = Original value - Adjusted value = 141,750 - 153,090 = - \$11,340   ....(b)

• Original value of stocks = \$12,600
• Adjusted value of stocks = \$11,025

Realized Gain/ Loss on stocks = Original value - Adjusted value = 12,600 - 11,025 = \$1,575 ......(c)

Total Realized Gain/ Loss to Gary for assets from Sharon = a + b + c = 43,470 + (-11,340) + 1,575 = \$33,705

Realized Gain to Gary = \$33,705

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