Eleanor exchanged Lakefront land held for investment for a parcel Mountaintop land.Eleanor intends to hold the Mountaintop land for investment as well.Eleanor's basis in the Lakefront property is $40,000.It is subject to a mortgage of $60,000 (which the acquirer, Fenton, assumes).

In order to obtain Eleanor's property, Fenton transferred the Mountaintop property (worth $100,000).The Mountaintop property was subject to a mortgage of $30,000.Fenton's basis in the property was $110,000.In addition, Fenton transferred stock with a fair value of $25,000 (basis of $18,000).Fenton held the Mountaintop property for business, but intends to hold the Lakefront property for investment.

Required:

a) Briefly explain how Eleanor and Fenton will report this exchange for federal tax purposes. List the authorities on which you rely.

For requirements b-d, make sure you provide labeled computations.

b) What is the fair market value of Eleanor's lakefront property?

c) What are the tax consequences of the exchange to Eleanor:

• Gain(loss) realized
• Gain (loss) recognized
• Basis in Mountain property

d) What are the tax consequences of the exchange to Fenton:

• Gain (loss) realized
• Gain (loss) recognized
• Basis in Lakefront property