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

question 68

Essay

Sammy exchanges land used in his business in a like-kind exchange. The property exchanged is as follows:
Property Surrendered Property Received
Adj. Basis FMV Adj. Basis FMV Land $44,000 $60,000 $50,000 $43,000
Cash $ 5,000 $ 5,000
Liability on land $12,000 $12,000
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:

Flexibility

The ability to adapt to changes, make decisions quickly and adjust to new conditions or environments.

Futures Contracts

Agreements to buy or sell a particular commodity or financial instrument at a predetermined future date and price.

Copper

A chemical element with the symbol Cu and atomic number 29, known for its high thermal and electrical conductivity, used in electrical equipment, construction, and various alloys.

Maturity Date

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and is to be paid in full.