The Andersons are considering selling the condo on High Road. They are considering two options, a like-kind exchange or installment sale.

First consider a like-kind exchange. Because the Andersons are avid skiers, they are considering purchasing a new ski condo in a mountain resort. The purchase price of the ski condo will be $318,000 and they can sell High Rd. for $137,500. For the sake of simplicity, assume for purposes of this question only, that the depreciation taken on the High Road property is $20,000. The Andersons will assume a mortgage to pay for the difference between the two properties.

Assess the Andersons current situation as it relates to selling High Road and purchasing of the ski condo. Recommend a technique that would be beneficial from an income tax standpoint. Also, compute the basis and any gain or loss realized and recognized in the ski condo. The ski condo would be rented out for a majority of the year and may properly be treated as a rental property.