Question

Bob owns a warehouse that is used in business while rebecca owns land. bob exchanges the warehouse for the​ land, which will be held for investment. the fmv of the warehouse is​ $440,000 (basis​ $240,000), but the warehouse is subject to a mortgage of​ $80,000, which is assumed by rebecca. bob receives​ $40,000 cash and the​ land, which has a fmv of​ $320,000. bob realizes a gain​ (loss) on the exchange of

Answer 1

A. Compute Bob's realized gain (loss) on the exchange. $320,000 + $40,000 + $80,000 = $440,000 - that is selling price $440,000 - $240,000(basis) = $200,000 - that is realized gain B. Compute Bob's taxable recognized gain. $200,000 / $440,000 = 45.45% ($40,000 + $80,000) * 45.45% = $54,544 C. Compute Bob's basis in the land. $(440,000-120,000) / $440,000 = 72.72% $240,000 * 72.72% = $174.545