Answer:1.) $20,000 ; 2) $0 ; 3) $160,000
Step-by-step explanation:
Adjusted basis transferred = $140,000
Fair market value = $160,000
Exchange is classed as a like-kind exchange.
The realized gain in exchange occurs when a property is sold for a higher price than it was purchased.
Here, the realized gain in the exchange is the difference between the value of the like-kind exchange made :
$160,000 - $140,000 = $20,000
The recognized gain may be referred to as the taxable portion of the realized gain, however, for like kind exchanges involving is tax-free.
Therefore recognized gain = $0
Adjusted basis in the real estate received :
Adjusted basis of old property + realized gain
$140,000 + $20,000 = $160,000