Matthew exchanges an investment apartment building for a parcel of land. The apartment building has a fair market value of $80,000 and an adjusted basis of $95,000. The land's value is $60,000. Matthew receives $20,000 cash in the exchange. What is Matthew's recognized gain (loss) on the exchange and his basis in the land?

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Business

Bella Mann

7 June, 13:17

Matthew exchanges an investment apartment building for a parcel of land. The apartment building has a fair market value of $80,000 and an adjusted basis of $95,000. The land's value is $60,000. Matthew receives $20,000 cash in the exchange. What is Matthew's recognized gain (loss) on the exchange and his basis in the land?

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Red Hot · Answer 1

Recognized gain (loss) on the exchange = $0

Basis in the land = $75,000

Explanation:

Apartment Fair market value = $80,000

Land's value = $60,000

Cash received = $20,000

So Gain / (Loss) = $80,000 - ($60,000+$20,000) = $0

Basis in Land = $95,000-$20,000 = $75,000