$400,000 received - $230,000 basis = $170,000 gain realized but deferred.
$400,000 - $170,000 deferred gain = $230,000 basis in land received.
a. $320,000 received - $350,000 basis = $30,000 loss realized but deferred.
$320,000 + $30,000 deferred loss = $350,000 basis of apartment building.
b. Because Shawn must defer the loss, he would have been better off if he had sold
the factory building and then purchased the apartment building with the proceeds.
In that way, he could recognize the $30,000 loss and reduce his taxes.
a. $108,000 - $16,000 cash - $69,000 basis = $23,000 realized gain. None of the
$23,000 gain is recognized.
b. $23,000 gain is deferred. Taylor gave boot; only the receipt of boot triggers
c. The basis of the large machine is $85,000 ($108,000 - $23,000 deferred gain).
(Alternative basis calculation: $69,000 basis of machines surrendered + $16,000