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TP exchanged an apartment building with an adjusted basis of $100,000 and a FMV of $175,000 for land and a small rental house. The land had a FMV of $125,000 and the house had a FMV of $50,000. The apartment building was 19-year real property and

TP exchanged an apartment building with an adjusted basis of $100,000 and a FMV of $175,000 for land and a small rental house. The land had a FMV of $125,000 and the house had a FMV of $50,000. The apartment building was 19-year real property and

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TP exchanged an apartment building with an adjusted basis of $100,000 and a FMV of $175,000 for land and a small rental house. The land had a FMV of $125,000 and the house had a FMV of $50,000. The apartment building was 19-year real property and accelerated depreciation of $200,000 had been taken. If straight-line depreciation had been used, only $125,000 of depreciation would have been taken. Hint: Has TP received enough 1250 property to cover the 1250 taint? If not, gain must be recognized to the extent of the excess. a. What is the realized and recognized gain on the exchange? b. What is the character of any recognized gain?
Transcribed Image Text:TP exchanged an apartment building with an adjusted basis of $100,000 and a FMV of $175,000 for land and a small rental house. The land had a FMV of $125,000 and the house had a FMV of $50,000. The apartment building was 19-year real property and accelerated depreciation of $200,000 had been taken. If straight-line depreciation had been used, only $125,000 of depreciation would have been taken. Hint: Has TP received enough 1250 property to cover the 1250 taint? If not, gain must be recognized to the extent of the excess. a. What is the realized and recognized gain on the exchange? b. What is the character of any recognized gain?
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