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, 2017, 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. As the real estate market on the East Coast is thriving, on September 1, 2018, Lisa sells the land she acquired for $120,000.If an amount is zero, enter "0".a. On January 4, 2017, Tanya's realized gain for the West Coast land is $, her recognized gain is $, and her adjusted basis is $.b. On January 4, 2017, Lisa's realized gain for the East Coast land is $, her recognized gain is $, and her adjusted basis is $.c. Lisa's realized gain from the September 1, 2018, sale is $. Her recognized gain from the September 1, 2018 sale is$.d. What effect does Lisa's 2018 sale have on Tanya?Lisa’s sale of the East Coast land has for Tanya.e. Complete the letter to Tanya advising her of the tax consequences of this exchange.

Answer 1

Following are the solution to the given point:

Step-by-step explanation:

In point a:

Sum of:

= ($89,000 + $3,000)

= $92,000

Modified foundation= -$80,000

A real profit= $12,000

Gain (boot received) recognised = $3,000

Tanya's West Coast Changed Base:

Fair Market = $89,000

Posted benefit:

= ($ 12,000- $ 3,000)

= $ 9,000

Adjusted Base =$80,000

In part b:

Realized benefit calculation:

Sum of = $92,000

Modified Base =$72,000 + $3,000 = $75,000

A real profit= $17,000

gain was accepted = $0

Changed base of Martin to the West Coast:

Fair Market = $92,000

Gain deferred = ($17,000-$0) = $ 17,000

Adjusted Base = $75,000

In point c:

Recognized benefit from Martin:

Value = $1,20,000

Base adjusted= $ 75,000

actual gain = $45,000

Gain Recognized= $45,000

In point d:

Tanya has little effect mostly on selling by Lisa of an eastern seaboard ground. There is no supposed selling care among Lauren and Tanya after selling property on the eastern seaboard since they are unrelated parties.

In point e:

sum of = $92,000.

Tanya 's acceptable basis is $80,000 ($89,000-($12,000-$3,000)).

actual benefit = $ 12,000

gain benefit = $3,000

Since the trade is deemed a non-taxable trade, $3,000 is recognized of the total $12,000 benefit. Its ground earned is $80,000 adjusted.