Mandy and Timothy exchange equipment in a like-kind Exchange. Mandy receives equipment with a fair market value of $28,000 and transfers equipment worth $20,000 (adjusted basis of $14,000) and cash of $8,000. What is Mandy's realized and recognized gain?

Question

Riley Good

Business

14 October, 23:19

Mandy and Timothy exchange equipment in a like-kind Exchange. Mandy receives equipment with a fair market value of $28,000 and transfers equipment worth $20,000 (adjusted basis of $14,000) and cash of $8,000. What is Mandy's realized and recognized gain?

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Answers (1)

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Kallie Matthews · Answer 1

Realized gain of Mandy will be $6000

Explanation:

We have given Mandy receives equipment with a fair market value of $28000

Adjusted basis = $14000+$8000 = $22000

We have to find the Mandy realized gain

So Mandy realized gain is given by

Realized gain = market value - adjusted basis = $28000 - $22000 = $6000

So the realized gain of Mandy will be $6000