Kevin Exchanges an Office Building Used in His Business for Another

question 959

Essay

Kevin exchanges an office building used in his business for another office building worth $200,000 plus $30,000 c FMV of Kevin's old building is $280,000 (basis $150,000) and it is subject to a mortgage of $50,000. The mortgage assumed by the other party.
a. What is the amount of gain realized by Kevin?
b. What is the amount of gain recognized by Kevin?
c. What is the basis of the new building to Kevin?

---

Definitions:

Master Offer

A principal or primary proposal made during negotiations, often outlining the main terms and conditions of a contract.

Valid Acceptance

In contract law, a manifestation of assent to the terms of an offer in a manner invited or required by the offer, constituting a binding legal agreement.

Unilateral Contract

A contract in which one party makes a promise in exchange for the other's performance, which constitutes acceptance of the offer, focusing on acted-upon promises rather than exchanges of promises.

Full Performance

The complete fulfillment of all terms and obligations specified within a contract, leading to its termination upon satisfactory execution by all parties involved.