Karen Klaus has a business building (Section 1250 property) with an adjusted basis of ($ 40,000) and

Question:

Karen Klaus has a business building (Section 1250 property) with an adjusted basis of $\$ 40,000$ and a fair market value of $\$ 160,000$. The building originally cost $\$ 170,000$ when purchased in 2014 . In 2018 , she exchanged it for another building with a fair market value of $\$ 120,000$ and received $\$ 40,000$ cash.

a. What are the tax consequences of the exchange for Karen?

b. What would the tax consequences be if the new building had a fair market value of $\$ 160,000$ and no cash was received?

Fantastic news! We've Found the answer you've been seeking!