Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the East Coast. On January 4, 2017, she exchanges it with Lisa Martin (an unrelated party) for undeveloped land on the West Coast and $3,000 cash. Lisa has an adjusted basis of $72,000 for her land, and its fair market value is $89,000. As the real estate market on the East Coast is thriving, on September 1, 2018, Lisa sells the land she acquired for $120,000.

If an amount is zero, enter "0".

a. On January 4, 2017, Tanya's realized gain for the West Coast land is $, her recognized gain is $, and her adjusted basis is $.

b. On January 4, 2017, Lisa's realized gain for the East Coast land is $, her recognized gain is $, and her adjusted basis is $.

c. Lisa's realized gain from the September 1, 2018, sale is $. Her recognized gain from the September 1, 2018 sale is $.

d. What effect does Lisa's 2018 sale have on Tanya?

Lisas sale of the East Coast land has for Tanya.

e. Complete the letter to Tanya advising her of the tax consequences of this exchange.

Hoffman, Young, Raabe, Maloney, & Nellen, CPAs 5191 Natorp Boulevard Mason, OH 45040

January 14, 2017

Ms. Tanya Fletcher The Corral El Paso, TX 79968

Dear Ms. Fletcher:

You asked about the tax consequences of the January 4, 2017 land exchange with Lisa Martin. Based on the data provided, the tax consequences are as follows:

Amount realized	$
Less: adjusted basis
Equals: realized gain	$
Recognized gain	$

Because the transaction as a nontaxable like-kind exchange, only $ of your potential gain of $ is recognized. The adjusted basis for the land received is $.

If I can be of further assistance, please let me know.

Sincerely,

Margaret Adams, CPA Tax Partner