Chaney Exchanges a Truck Used in Her Business for Making

question 7

Essay

Chaney exchanges a truck used in her business for making deliveries for a smaller more fuel-efficient truck to be used in her business for making deliveries.The adjusted basis for her truck is $32,000.The smaller truck has a fair market value of $33,000.In addition,Chaney receives cash of $4,000.
a.Calculate Chaney's realized and recognized gain or loss.
b.Calculate Chaney's basis for the assets she received.
a. $\begin{array}{ll}\text { Amount realized }(\$ 33,000+\$ 4,000) & \$ 37,000 \\\text { Adjusted basis } & \underline{(32,000)} \\\text { Realized gain } & \$ 5,000\\\text { Recognized gain }&\$4,000\end{array}$ a. $\begin{array}{ll}\text { Amount realized }(\$ 33,000+\$ 4,000) & \$ 37,000 \\\text { Adjusted basis } & \underline{(32,000)} \\\text { Realized gain } & \$ 5,000\\\text { Recognized gain }&\$4,000\end{array}$

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Definitions:

Optimism

A mindset characterized by a positive outlook and expectation that good things will happen.

Cognitive Functioning

Involves mental processes such as thinking, reasoning, remembering, problem-solving, and decision-making.

Pessimists

Individuals who generally expect negative outcomes or focus on the worst aspects of situations.

Learned Helplessness

A condition where a person suffers from a sense of powerlessness, arising from traumatic events or persistent failure to succeed.