In the Current Year, Penny Exchanges an Investment Property in Santa

question 47

Essay

In the current year, Penny exchanges an investment property in Santa Barbara with a mountain view for a lot with an ocean view in a qualifying like-kind exchange. Penny's basis in the land given up is $100,000 and the property has a fair market value of $250,000. In exchange for her property, Penny receives land with a fair market value of $200,000 and cash of $20,000. In addition, the other party to the exchange assumes a mortgage loan on Penny's property of $30,000.
a.Calculate Penny's realized gain, if any, on the exchange.
b.Calculate Penny's recognized gain, if any, on the exchange.
c.Calculate Penny's basis in the property received.

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Definitions:

Attitude Object

Any entity, whether a person, product, social group, or concept, towards which an individual holds a specific attitude.

Social Judgment Theory

A theory that proposes individuals make judgments about ideas or items, based on what they already believe, their anchor points.

Foot-In-The-Door Technique

A persuasive strategy that involves getting a person to agree to a large request by first setting them up to agree to a modest request.

Balance Theory

is a psychological theory suggesting that individuals strive for consistency in their relationships, attitudes, and beliefs within a triadic relationship model.