Jake Exchanges an Airplane Used in His Business for a Smaller

question 124

Essay

Jake exchanges an airplane used in his business for a smaller airplane to be used in his business. His adjusted basis for the airplane is $325,000 and the fair market value is $310,000. The fair market value of the smaller airplane is $300,000. In addition, Jake receives cash of $10,000. Calculate Jake's realized and recognized gain or loss and his adjusted basis for the assets received.

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Definitions:

Americans With Disabilities Act

A civil rights law enacted in 1990 in the United States, prohibiting discrimination against individuals with disabilities in all areas of public life.

Discriminate

To make an unjust or prejudicial distinction in the treatment of different categories of people, especially on the grounds of race, age, or sex.

Psychological Disorder

A pattern of behavioral or psychological symptoms that impact multiple areas of life and create distress for the person affected.

Anorexia Nervosa

A psychological and potentially life-threatening eating disorder characterized by extreme weight loss and self-starvation.