Jason and Mark Exchange Storage Buildings Each Use in Their

question 87

Essay

Jason and Mark exchange storage buildings each use in their business. In the trade, Jason receives Mark's storage building that is worth $20,000. Mark also assumes the $10,000 loan Jason had on the building. Jason purchased his storage building for $25,000 and had taken $12,000 of depreciation on the building up to the date of the exchange. Mark's adjusted basis in his building is $16,000 on the date of the exchange.
a.What is Jason's realized gain on the exchange?
b.What are the amount and the character of the gain Jason must recognize on the exchange?
c.What is Jason's basis in the storage building acquired in the exchange?

---

Definitions:

Proposition 187

A 1994 California ballot initiative intended to establish state-run citizenship screening, and deny illegal immigrants access to public services; it was largely struck down by the courts.

Illegal Immigrants

Individuals who enter or reside in a country without proper authorization from the government, often seeking employment or refuge.

Welfare

Governmental support intended to ensure the basic physical and material well-being of people in need.

AIDS Epidemic

A global public health crisis caused by the spread of the Human Immunodeficiency Virus (HIV) leading to Acquired Immune Deficiency Syndrome (AIDS), characterized by widespread illness and mortality since the early 1980s.