Question

Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $95,500) is worth $114,600 and Johnathan's land has a fair market value of $90,725, Johnathan also gives Logan cash of $23,875.

a. What is Logan's recognized gain?
b. Assume instead that Johnathan's land is worth $90,000 and he gives Logan $10,000 cash. Now what is Logan's recognized gain?

Answer 1

A. $19,100 Recognized Gain or Fairmarket Value of ($23,875).

B.$19,100 Recognized Gain or Fairmarket Value of ($10,000).

Step-by-step explanation:

a. Calculation to determine Logan's recognized gain

Based on the given information in a situation where Jonatha land is worth the amount of $90,725, which means Logan's RECOGNIZED GAIN will be $19,100, the lower of the REALIZED GAIN calculated as ($114,600 amount realized − $95,500 adjusted basis = $19,100) or the FAIRMARKET VALUE of the boot received of the amount of ($23,875).

b. Based on the information given assuming Johnathan and is been worth the Amount of $90,000 which therefore means that Logan's RECOGNIZED GAIN will be the amount of $19,100, the lower of the realized gain calculated as ($114,600 amount realized − $95,500 adjusted basis = $19,100) or the FAIRMARKET VALUE of the boot received OLog the amount of ($10,000).