Sammy Exchanges Equipment Used in His Business in a Like-Kind

question 137

Essay

Sammy exchanges equipment used in his business in a like-kind exchange. The property exchanged is as follows:
Property Surrendered Property Received
$\begin{array}{lllll}&\text { Adj. Basis}&\text { FMV }&\text { Adj. Basis}&\text { FMV }\\\text { Equipment } & \$ 44,000 & \$ 60,000 & \$ 50,000 & \$ 43,000 \\\text { Cash } & & & \$ 5,000 & \$ 5,000 \\\text { Liability on equipment } & \$ 12,000 & \$ 12,000 & &\end{array}$

$\text { The other party assumes the liability. }$
a. What is Sammy's recognized gain or loss?
b. What is Sammy's basis for the assets he received?

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Definitions:

Proposition

A statement that expresses a concept that can be true or false.

Converse

In logic, it refers to reversing the direction of a given implication; in geometry, it involves swapping the hypothesis and conclusion of a statement.

Proposition

In logic, a declarative sentence that is either true or false, serving as the building block for constructing arguments.

Converse

In logic, the converse of a statement is the reversal of its subject and predicate, testing different aspects or implications of the original statement.