Question
Cynthia owns Rental Property 1 (FMV = $300,000, AB = $250,000). Rental Property 1 is subject to a $100,000 loan. Cynthia exchanges Rental Property 1
Cynthia owns Rental Property 1 (FMV = $300,000, AB = $250,000). Rental Property 1 is subject to a $100,000 loan. Cynthia exchanges Rental Property 1 with Dan for Rental Property 2 (FMV = $200,000 ; AB = $400,000 ). Dan also assumes the $100,000 loan on Rental Property 1.
What is Cynthia’s recognized gain or loss on the exchange? Note: you should calculate realized gain/loss first, but the question asks only for recognized gain/loss.
What is Cynthia’s basis in Rental Property 2?
Note: make sure you understand what Dan’s basis in Rental Property 1 is after the exchange.
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Price theory and applications
Authors: Steven E landsburg
8th edition
538746459, 1133008321, 780538746458, 9781133008323, 978-0538746458
