1. As we know, many real properties interest involved in light kind exchanges are subject to mortgages that are transferred along with the property and become the legal liability of the new owner. We learned in chapter eight that the taxpayer who is relieved of the debt of the property must treat the relief as an amount realized from the disposition. However, when speaking about light kind exchanges the party that surrenders mortgage property receives booth equal to the debt relief, so basically the relief of the debt is treated exactly like cash received in the exchange while the assumption of debt is treated as cash paid. My question is why is the debt treated as cash paid if the amount is a debt?

 

2. What is the key criteria that define qualifying property, and how do exchanges involving qualifying property impact the capital gains tax liability for taxpayers?

 

Answer rating: 100% (QA)

1 In a likekind exchange the treatment of debt relief and assumption of debt is a bit complex When a taxpayer surrenders property with a mortgage as p... View the full answer