Commercial Substance – change in cash flow

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  • November 9, 2015 at 6:18 pm #198143
    Kls238
    Member

    When determining whether an exchange lacks commercial substance due a change in cash flow, are you comparing the FV of the asset received & any cash received to the FV of the asset given & any cash given? So, would the following be accurate:

    FV of asset received & cash received = FV of asset given up —> lacks commercial substance

    FV of asset received = FV of asset given up & any cash given —> lacks commercial substance

    FV of asset received & cash received =/= FV of asset given up & any cash given —> commercial substance

    Forgive me if that’s a dumb question. I can grasp inter-company transactions and other challenging topics, but my brain wants to shut down when it comes to nonmonetary exchanges.

    Passed all sections.

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