Sean Inherited a Farm His Grandfather Had Purchased 50 Years

question 62

Multiple Choice

Sean inherited a farm his grandfather had purchased 50 years ago for $40,000. It was valued at $1,000,000 when his grandfather died but has a current value of $1,100,000. Sean did not like farming so he traded the farm for an apartment building valued at $950,000 owned by Jean that has a basis of $700,000. In addition, Sean received $150,000 in cash from Jean to finalize the exchange.

• A) What are the amounts realized by Sean and Jean on the exchange?
• B) What are the gains or losses realized by Sean and Jean on the exchange?
• C) What are the gains or losses recognized by Sean and Jean on the exchange?
• D) What are the bases of the properties received by Sean and Jean?

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