Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2022, Owen and Lisa exchange real property. Lisa gives up a real property (used for investment purposes) with an adjusted basis of $200,000 and a fair market value of $600,000. In return for this property, Lisa receives from Owen real property (used for investment purposes) with a fair market value of $555,000 and cash of $45,000. Owens adjusted basis in his real property he exchanges is $250,000. In March 2023, Owen sells the real estate to a third party for $580,000.

Required: Go to the IRS website. Locate and review Publication 544, Chapter 1, Nontaxable Exchanges. If you go to Like Kind Exchanges between related persons, this should assist you. Write a summary stating the amount of Owen and Lisas gain recognition for 2022. Also determine the effect, if any, of the subsequent sale in 2023 Show all of your computations.