Property - Taxable and non taxable dispositions

Question 1

What is the amount realized

Answer 1

Cash + FV of any property or services received + any liabilities assumed by the BUYER - selling expenses

Question 2

What is the adjusted basis

Answer 2

Cost of the property + improvements + depreciation

Question 3

What is the formula for realized gain or loss

Answer 3

Amount realized - adjusted basis = realized gain or loss

Question 4

What is a recognized gain or loss

Answer 4

The amount of a realized gain or loss that is included in the taxable income of the taxpayer

Question 5

Like-kind exchanges:

Formulas for realized, recognized, and basis of new property when boot is PAID

Answer 5

1) Amount realized - (FMV of property RECEIVED - boot paid) - adjusted basis of property given up
2) Gain / loss recognized - Lesser of realized gain or boot received
3) Basis of new property = adjusted basis of property given up + boot paid

Question 6

Like-kind exchanges

Formulas for realized, recognized and basis of new property when boot is RECEIVED

Answer 6

Gain realized: FMV of new property + boot received - adjusted property given up
Gain recognized: lesser of realized gain or boot received
New basis: adjusted basis of property given up + gain - boot received