Cynthia owns Rental Property 1 (FMV = $300,000, AB = $250,000). Rental Property 1 is subject to a $100,000 loan. Cynthia exchanges Rental Property 1 with Dan for Rental Property 2 (FMV = $200,000 ; AB = $400,000 ). Dan also assumes the $100,000 loan on Rental Property 1.

What is Cynthia’s recognized gain or loss on the exchange? Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.

What is Cynthia’s basis in Rental Property 2?

Note: make sure you understand what Dan’s basis in Rental Property 1 is after the exchange.

Answer rating: 100% (QA)

Basis Each house is a separate transaction The rule about rolling over the gain from the first hous... View the full answer