Lorch Company Exchanged an Old Asset with a $120,700 Tax

question 92

Essay

Lorch Company exchanged an old asset with a $120,700 tax basis and a $155,000 FMV for a new asset with a $142,250 FMV and $12,750 cash.
a.If the old asset and the new asset are like-kind properties,compute Lorch's realized and recognized gain and Lorch's tax basis in the new asset.
b.How would your answers change if the new asset is worth only $116,000,and Lorch received $39,000 cash in the exchange?

---

Definitions:

Negative Emotional Reactions

Refers to undesirable feelings or emotions that result from certain experiences or thoughts.

Impulsively

Acting on or inclined to act on sudden urges without considering the consequences.

Birth Order

The rank or position of an individual within their family, determined by the timing of their birth relative to their siblings.

Abnormal Levels

Atypical quantities or concentrations of substances or characteristics, often indicating a health issue or anomaly.