Question

Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the East Coast. On January 4, 2014, she exchanges it with Martin (an unrelated party) for undeveloped land on the West Coast and $3,000 cash. Martin has an adjusted basis of $72,000 for his land, and its fair market value is $89,000. As the real estate market on the East Coast is thriving, on September 1, 2015, Martin sells the land he acquired for $120,000.
a. What are Tanya's recognized gain or loss and adjusted basis for the West Coast land on January 4, 2014?
b. What are Martin's recognized gain or loss and adjusted basis for the East Coast land on January 4, 2014?
c. What is Martin's recognized gain or loss from the September 1, 2015 sale?
d. What effect does Martin's 2015 sale have on Tanya?
e. Write a letter to Tanya advising her of the tax consequences of this exchange. Her address is The Corral, El Paso, TX 79968.


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  • CreatedMay 25, 2015
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