Delta Airlines trades two of its short-range jets to one of its regional commuter partners for a newer medium-range jet. Delta's jets have a fair market value of $4,000,000 and a basis of $2,250,000. The newer jet has a fair market value of $3,750,000, so Delta received $250,000 cash from the regional airline to complete the exchange.
a. What is Delta's realized and recognized gain or loss on the exchange?
b. What is its deferred gain or loss?
c. What is its basis in the airplane acquired?
d. How would your answers change if Delta's basis in the two short-range planes was $3,900,000?
e. How would your answers change if its basis in the planes was $4,150,000?