Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the

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Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the East Coast. On January 4, 2018, 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, 2019, Lisa sells the land she acquired for $120,000.
a. What are Tanya's recognized gain or loss and adjusted basis for the West Coast land on January 4, 2018?
b. What are Lisa's recognized gain or loss and adjusted basis for the East Coast land on January 4, 2018?
c. What is Lisa's recognized gain or loss from the September 1, 2019 sale?
d. What effect does Lisa's 2019 sale have on Tanya?
e. Write a letter to Tanya advising her of the tax consequences of this exchange.
Her address is The Corral, El Paso, TX 79968.

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a The exchange by Tanya qualifies for 1031 likekind exchange treatment Amount realized 89000 3000 92000 Adjusted basis 80000 Realized gain 12000 Recognized gain 3000 The boot received of 3000 triggers ...View the full answer

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South-Western Federal Taxation 2019 Essentials Of Taxation Individuals And Business Entities

ISBN: 9781337702966

22nd Edition

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Question Posted: Jun 15, 2019 08:58 AM

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Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the

Question:

Step by Step Answer:

a The exchange by Tanya qualifies for 1031 likekind exchange treatment Amount realized 89000 3000 92000 Adjusted basis 80000 Realized gain 12000 Recognized gain 3000 The boot received of 3000 triggers ...View the full answer

South-Western Federal Taxation 2019 Essentials Of Taxation Individuals And Business Entities

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