Firm M exchanged an old asset with a $$16,600$ tax basis and a $$39,000$ FMV for a new asset worth $$27,500$ and $$11,500$ cash.

Required:

a$.$ If the exchange is nontaxable, compute Firm M$\text{'}$s realized and recognized gain and tax basis in the new asset.

b$.$ How would your answers change if the new asset were worth only $$16,000,$ and Firm M received $$23,000$ cash in the exchange?

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Required A

If the exchange is nontaxable, compute Firm M$\text{'}$s realized and recognized gain and tax basis in the new asset.

How would your answers change if the new asset were worth only $$16,000,$ and Firm M received $$23,000$ cash in the exchange?