Circle Co. owns equipment 1 (FMV = $50,000, AB = $15,000) that it uses in its business. Circle Co. exchanges equipment 1 for equipment 2 (FMV = $40,000) and stock worth $10,000 in a like - kind exchange.
17. What is Ci rcle Co.âs r ecognized gain or loss on the exchange? Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.
18. What is Circle Co.âs basis in equipment 2?
19. What is Circle Co.âs basis in the stock?
Note: the realized gain that was not recognized in Q17 did not disappear; it is built in to equipment 2 after the exchange (FMV of Equip 2 minus Circle Co.âs basis should equal any realized but not recognized gain from Q17.
Circle Co. owns equipment 1 (FMV = $50,000, AB = $15,000) that it uses in its business. Circle Co. exchanges equipment 1 for equipment 2 (FMV = $40,000) and stock worth $10,000 in a like - kind exchange.
17. What is Ci rcle Co.âs r ecognized gain or loss on the exchange? Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.
18. What is Circle Co.âs basis in equipment 2?
19. What is Circle Co.âs basis in the stock?
Note: the realized gain that was not recognized in Q17 did not disappear; it is built in to equipment 2 after the exchange (FMV of Equip 2 minus Circle Co.âs basis should equal any realized but not recognized gain from Q17.
Related questions
Kase, an individual, purchased some property in Potomac,Maryland, for $242,000 approximately 10 years ago. Kase isapproached by a real estate agent representing a client who wouldlike to exchange a parcel of land in North Carolina for KaseâsMaryland property. Kase agrees to the exchange.
| What is Kaseâs realized gain or loss, recognized gain or loss,and basis in the North Carolina property in each of the followingalternative scenarios? (Loss amounts should be indicated bya minus sign.) â1) The transaction qualifies as a like-kindexchange and the fair market value of each property is $715,000.(Leave no answer blank. Enter zero ifapplicable.) a) Realized Gain?___ b) recognized gain 0 âc) Adjusted basis in new property?_____ â2) The transaction qualifies as a like-kind exchange and the fairmarket value of each property is $202,000. (Leave no answerblank. Enter zero if applicable.) a) Realized Gain?___ b) recognized gain 0 âc) Adjusted basis in new property?_____
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