There is a parcel of land next to the Playful Paws, Inc. building. Ellen, the owner of
Question:
There is a parcel of land next to the Playful Paws, Inc. building. Ellen, the owner of this property, approached John to discuss the idea of selling it to him. John is interested. Ellen knows that John owns a vacant lot downtown and his basis on the lot is $82,000. Ellen has proposed an exchange. She told John there may be a tax advantage for John in doing so. The land next to Playful Paws is worth $100,000. In addition to the land, Ellen will pay John $20,000 cash at closing.
Assuming they complete the exchange, please let John know:
A. His current basis.
B. If there are any immediate tax consequences as a result of the sale.
C. His basis in the new lot after the exchange.
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw