Kevin Exchanges an Office Building Used in His Business for Another

question 89

Essay

Kevin exchanges an office building used in his business for another office building worth $200,000 plus $30,000 cash.The FMV of Kevin's old building is $280,000 (basis $150,000)and it is subject to a mortgage of $50,000.The mortgage is 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?

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Definitions:

Associative

Relating to or involving the formation of associations or connections between ideas, feelings, or sensations.

Cooperative

Working together willingly towards a common goal or benefit.

Non-social

Pertains to behavior or activities conducted in solitude or without interaction with other individuals.

Solitary Play

A type of play where a child plays alone, often engrossed in their activity, and does not seek to interact with other children or adults nearby.