Joe and John intend to enter into a like-kind exchange of real property qualifying for tax treatment under section 1031 of the Internal Revenue Code. Joe transfers land with a tax basis of $100,000 and fair market value of $400,000, subject to a mortgage of $100,000 to John. John transfers land worth $350,000 subject to a mortgage of $50,000. Please complete the following tables to compute Joe’s gain in the transaction and Joe’s basis in the property that he receives from John.
Joe and John intend to enter into a like-kind exchange of real property qualifying for tax treatment under section 1031 of the Internal Revenue Code. Joe transfers land with a tax basis of $100,000 and fair market value of $400,000, subject to a mortgage of $100,000 to John. John transfers land worth $350,000 subject to a mortgage of $50,000. Please complete the following tables to compute Joe’s gain in the transaction and Joe’s basis in the property that he receives from John.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 9MC
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Joe and John intend to enter into a like-kind exchange of real property qualifying for tax treatment under section 1031 of the Internal Revenue Code. Joe transfers land with a tax basis of $100,000 and fair market value of $400,000, subject to a mortgage of $100,000 to John. John transfers land worth $350,000 subject to a mortgage of $50,000. Please complete the following tables to compute Joe’s gain in the transaction and Joe’s basis in the property that he receives from John.
Transcribed Image Text:Description
Basis in Relinquished Property
+ Boot Given
+ Liabilities Assumed by Transferor
+ Gain Recognized on Boot Transfer / Net Liability Relief
-
Boot Received
- Liabilities Assumed by Transferee
- Loss Recognized on Boot Transfer
Basis in Replacement Property
$350,000
$0
$0
$0
$0
$50,000
$0
$350,000
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