Matt owns a duplex which he has been renting to tenants for the past 13 years. He

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

Question:

Matt owns a duplex which he has been renting to tenants for the past 13 years. He paid $400,000 to acquire the duplex and has claimed $170,000 in depreciation deductions. The remaining balance for the mortgage on the duplex is $185,000. Matt is tired of being in the rental property business.Levi owns a small goat farm which she inherited from her mother. Her basis in the farm (fair market value on the date of her mother's death) is $62,000. The goat farm has no debt. Levi is tired of raising goats.So Matt and Levi arrange to exchange properties. When Matt discovers that his property appraises for $600,000 (subject to the mortgage, which leaves an equity of $415,000) and Levi's property appraises at $390,000 (with no mortgage), Matt demands that Levi also pay him cash of $25,000 to equalize the exchange. Levi agrees and they complete the exchange in November of 2022 carefully making sure they meet all requirements for a like kind exchange

a. How much gain or loss will Matt recognize as a result of the exchange?

b. What basis will Matt have in the goat farm?

c. How much gain or loss will Levi recognize as a result of the exchange?

d. What basis will Levi have in the duplex?