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5 February, 00:44

Matthew exchanges an investment apartment building for a parcel of land. The apartment building has a fair market value of $80,000 and an adjusted basis of $95,000. The land's value is $60,000. Matthew receives $20,000 cash in the exchange. What is Matthew's recognized gain (loss) on the exchange and his basis in the land?

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  1. 5 February, 00:47
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    Recognized gain (loss) on the exchange = $0

    Basis in the land = $75,000

    Explanation:

    Apartment Fair market value = $80,000

    Land's value = $60,000

    Cash received = $20,000

    So Gain / (Loss) = $80,000 - ($60,000+$20,000) = $0

    Basis in Land = $95,000-$20,000 = $75,000
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