1. Jane has a machine with an adjusted basis of $15,000 and value of $40,000. She exchanges the machine in a qualifying like-kind exchange for a machine also valued at $40,000.

a. Does Jane have a gain or loss? What is her basis in the machine acquired?

b. Assume that Jane exchanges the machine for a new one. She is given a $16,000 trade allowance, and pays $20,000 in cash. Does she have a gain or loss? What is her basis in the machine acquired?