Q.3 Joseph exchanged farmhouse that he used in his farming business for a building used by Sandy in her motorcycle manufacturing business. The farmhouse had a FMV of $875,000 and cost $415,000. Joseph $245,000 of depreciation, but because of an error, the amount of depreciation he should have taken was $330,000. The building had a FMV of $700,000 and an adjusted basis of $825,000. Additionally, Sandy agreed to assume Josephs mortgage of $150,000 and give Joseph cash of $25,000. What is Josephs realized gain or loss?

Calculate Josephs basis in the building after the transaction. How much gain or loss did Joseph defer?

Explain your answer.

Determine Sandys recognize gain or loss show your calculation and explain your answer?

Q.4 George purchased stock in 2016 for $20,000. He gave the stock to his son, William, in 2017. On the date of the gift the FMV of the stock was $14,500 and no gift tax was paid on the transfer. William later sold the stock for $12,700. What is Williams recognize gain or loss on the sell of the stock: