Firm M exchanged an old asset with a $$10,700$ tax basis and a $$28,000$ FMV for a new asset worth $$22,000$ and $$6,000$ cash.

Required:

a$.$ If the exchange is nontaxable, compute Firm M$$s realized and recognized gain and tax basis in the new asset.

realized gain $=$

recognized gain $=$

tax basis $=$

b$.$ How would your answers change if the new asset were worth only $$10,500,$ and Firm M received $$17,500$ cash in the exchange?

realized gain $=$

recognized gain $=$

tax basis $=$