Question

Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the East Coast. On January 4, 2019, she exchanges it with Lisa Martin (an unrelated party) for undeveloped land on the West Coast and $3,000 cash. Lisa has an adjusted basis of $72,000 for her land, and its fair market value is $89,000. Because the real estate market on the East Coast is thriving, on September 1, 2020, Lisa sells the land she acquired for $120,000.

On January 4, 2019, Tanya's realized gain for the WestWest Coast is $ _____________, her recognized gain is $ _____________, and her adjusted basis is $ _____________,

Answer 1

The correct answer is $12,000 , $3,000 and $80,000.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Realized Amount = $89,000 + $3,000 = $92,000

Adjusted Basis = $80,000

So, Realized gain = Realized Amount - Adjusted Basis

= $92,000 - $80,000 = $12,000

Now, recognized gain = Cash received = $3,000

Adjusted Basis for Tanya = Fair market value - Postponed gain,

Where postponed gain = $12,000 - $3,000 = $9,000

So, by putting the value, we get

Adjusted basis = $89,000 - $9,000 = $80,000