(1) Sidney exchanges equipment used in his business in a like kind exchange. The property exchanged is provided below.
Equipment
Cash
Liability on Equipment
Property Given Up
Adjusted
Fair Market
Basis
Value
\$
39,000 \$
54,000
0
0
9,000
9,000
Property Received
Adjusted
Fair Market
Basis
Value
\$
49,000 \$
42,000
3,000
3,000
0
0
(a) What is Sidney's recognized gain or loss?
(b) What is Sidney's basis for the assets he received?
(2) On January 5, 2024, Bill sells his principal residence with an adjusted basis of $165,000 for $475,000. He has owned and occupied the residence for 22 years. He pays $23,750 in commissions and $2,500 in legal fees in connection with the sale. One month before the sale, Bill painted the house at a cost of $4,500 and repaired various items at a cost of $5,500. On January 15, 2024, Bill purchases a new home for $525,000. On November 15, 2024, he pays $35,000 for completion of a new room on the house, and on January 14, 2025, he pays $20,000 for the construction of a pool. What is the Bill's recognized gain on the sale of his old principal residence and what is the basis for the new residence as of January 14, 2025?
(3) Pink Corporation exchanges an office building located in Oakland for investment land located in Mobile and owned by Ted. Pink's adjusted basis for the office building is $200,000 and the fair market value is $750,000. Since the fair market value of the investment land is $700,000, Pink also receives cash of $50,000. What is Pink's recognized gain or loss and the basis for the investment land?
(4) Using the information from problem (3) above, assume instead, that rather than paying cash of $50,000 to Pink that Ted assumes Pink's $50,000 mortgage on the Oakland office building. What is Pink's recognized gain or loss and the basis for the investment land?
