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.

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Answer #1
  • 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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