Business K exchanged an old asset (FMV $107,000) for a new asset (FMV $107,000). Business Ks tax basis in the old asset was $149,000.

Required:

A) Compute Business Ks realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction.

B) Compute Business Ks realized loss, recognized loss, and tax basis in the new asset, assuming the exchange was a nontaxable transaction.

C) Six months after the exchange, Business K sold the new asset for $127,000 cash. How much gain or loss does Business K recognize if the exchange was taxable? How much gain or loss if the exchange was nontaxable?