Question

Firm A exchanged an old asset with a $20,000 tax basis for a new asset with a $32,000 FMV. Under each of the following assumptions, apply the generic rules to compute A’s realized gain, recognized gain, and tax basis in the new asset.
a. Old asset and new asset are not qualified property for nontaxable exchange purposes.
b. Old asset and new asset are qualified property for nontaxable exchange purposes.
c. Old asset and new asset are not qualified property for nontaxable exchange purposes. To equalize the values exchanged, Firm A paid $1,700 cash to the other party.
d. Old asset and new asset are qualified property for nontaxable exchange purposes. To equalize the values exchanged, Firm A paid $1,700 cash to the other party.
e. Old asset and new asset are not qualified property for nontaxable exchange purposes. To equalize the values exchanged, Firm A received $4,500 cash from the other party.
f. Old asset and new asset are qualified property for nontaxable exchange purposes. To equalize the values exchanged, Firm A received $4,500 cash from the other party.


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  • CreatedNovember 03, 2015
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