Problem 1:

Taxpayer purchased a truck for $50,000, and has used it in its trade or business for several years. Taxpayer has taken $50,000 of depreciation on the truck. Taxpayer exchanged the old truck (now worth $20,000) and $40,000 cash for a new truck worth $60,000. The new truck will be used in the taxpayers trade or business, and the exchange qualifies as a like-kind exchange under IRC 1031.

Analyze the tax results of the above transaction. (1) What is the taxpayers realized gain on the transaction; (2) What is the taxpayers recognized gain on the transactions; (3) what is the taxpayers basis in the new truck?Clearly show your work and label your answers.

Problem 2:

Taxpayer purchased a truck for $50,000, and has used it in its trade or business for several years. Taxpayer has taken $30,000 of depreciation on the truck. Taxpayer exchanged the old truck (now worth $25,000) for a new truck worth $22,000, and $3,000. The new truck will be used in the taxpayers trade or business, and the exchange qualifies as a like-kind exchange under IRC 1031.

Analyze the tax results of the above transaction. (1) What is the taxpayers realized gain on the transaction; (2) What is the taxpayers recognized gain on the transactions; (3) what is the taxpayers basis in the new truck? Clearly show your work and label your answers