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Metlock Inc. gave $10,000 cash and a piece of equipment to Sunland Inc. in exchange for a new machine. The exchange lacks commercial substance. Equipment:

Metlock Inc. gave $10,000 cash and a piece of equipment to Sunland Inc. in exchange for a new machine. The exchange lacks commercial substance.

Equipment:

Historical Cost = $50,000

Accumulated Depreciation = $40,000

Fair Market Value = $30,000

Machine:

Historical Cost = $50,000

Accumulated Depreciation = $35,000

Fair Market Value = $40,000

What is Metlock's basis in the "new" machine?

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