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ACC_4301_Solutions_to_Problems_(Chapter_15)

# ACC_4301_Solutions_to_Problems_(Chapter_15) - PROBLEMS 29 a...

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PROBLEMS 29. a. Amount realized \$210,000 Adjusted basis (250,000) Realized loss (\$ 40,000 ) Recognized loss (\$ –0–) Presuming both properties are held as investments, the exchange qualifies for § 1031 postponement treatment. p. 15-3 b. Because of the postponed loss, the basis in the land is \$250,000 (\$210,000 + \$40,000). Example 10 30. a. Amount realized \$16,000 Adjusted basis (19,000) Realized loss (\$ 3,000) Recognized loss (\$ –0– ) The exchange qualifies for § 1031 postponement treatment. This treatment is mandatory. p. 15-4 b. Because of the postponed loss, the basis in the new car is \$19,000 (\$16,000 + \$3,000). Example 10 c. The exchange does not qualify for § 1031 treatment. Therefore, the realized loss of \$3,000 is not recognized (loss on personal use asset) and the basis for the new car is \$16,000. p. 15-4 31. a. October 8, 2009 Amount realized \$500,000 Adjusted basis (350,000) Realized gain \$150,000 Recognized gain \$ –0– The transaction qualifies as a like-kind exchange. Tex’s basis for the land received is \$350,000 (\$500,000 – \$150,000). February 15, 2010 Amount realized \$600,000 Adjusted basis (350,000) Realized gain \$250,000 Recognized gain \$250,000 The sale of the land by Tex results in the previously postponed realized gain of \$150,000 being recognized. The subsequent appreciation of \$100,000 also is recognized.

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