[Anonymous]

I am having trouble understanding how to calculate these. I have Ninja Notes and Becker but it still isn’t clicking. Test in the A.M. so any quick words of wisdom would be great!

[Anonymous]

@ akb9874- Remember these three things on the exam:

Gain/Loss Realized = Amount Realized – Adjusted Basis of Property Given up

Gain/Loss Recognized= Lessor of Realized Gain or Boot Rec'd (Realized Loss Never Recognized)

Basis of New Property= Adjusted Basis of Property Given up + Gain Recognized + Boot Paid + Boot Rec'd

Make sure you practice R1/Capital Gain homework to grasp on like kind exchange business/asset. Good Luck Boss!!!!

[goodluck2everyone]

that last part should be – Boot Rec'd 😉

BEC- 80
REG- 68, 71, July
AUD- 61 , 84
FAR- -- 75 🙂

[Anonymous]

Do you always use the Adjusted Basis as your starting point or do you use FMV in certain cases?

[goodluck2everyone]

for like-kind exchange, the new basis will always be the adjusted basis

for non-kind exchange, I think this question best sums it up:

Nancy Stuart operates a business as a sole proprietorship. In Year One, she trades one of her depreciable assets with a tax basis of $25,000 and a fair value of $34,000 to another company for an asset that does not qualify as being like-kind. This new asset has a fair value of $36,000. To even out the trade, Stuart also had to pay cash of $2,000. What is her tax basis for the new asset and what gain must she report on the exchange for tax purposes?

A $36,000 and $9,000

B $34,000 and $2,000

C $27,000 and zero

D $25,000 and $11,000

answer A

Because the trade was not of like-kind property, the basis of the property given up is removed ($25,000 plus $2,000 or $27,000 in total) and the asset received is recorded at its fair value ($36,000). The difference in the new tax basis ($36,000) and the tax basis given up ($27,000) is recorded as a gain on the exchange.

BEC- 80
REG- 68, 71, July
AUD- 61 , 84
FAR- -- 75 🙂

[SDTrojan1904]

I had trouble with this until I started breaking down the process in steps. Just know the 3 main calculations in step #1 and everything falls into place.

Step #1) Calculate the boot received, boot paid, and amount realized

Boot RECEIVED = Cash RECEIVED + FMV of non like-kind property RECEIVED + net relief of liabilities

Boot PAID = Cash PAID + FMV of non like-kind property PAID (gave up) + net relief of liabilities assumed

Amount realized = FMV of New Property received + FMV of Boot received – FMV of Boot paid

Step #2) Find out realized gain so we can determine recognized gain

Realized gain = Amount realized – Adjusted basis (NBV) of property given up

Recognized gain = LESSER of realized gain or boot received

Step #3) Calculate basis of new property received

Basis of new property received = Adjusted basis (NBV) of property given up + GAIN RECOGNIZED + Boot Paid – Boot received

[SDTrojan1904]

Oh and good luck!

[katiekanton]

@SDTrojan

HOW did you do that????

AUD - 88
FAR - 90
REG - 85
BEC - 88

[katiekanton]

I had no idea we could do that! Yay! and thanks for explaining.

testing:

Emphasized text

Strong text

AUD - 88
FAR - 90
REG - 85
BEC - 88

[SDTrojan1904]

There you go! I had to google HTML coding real quick because my post originally came out really hard/annoying to read.

Good luck on REG, I'll be praying for the both of us since I'll be taking it this week too!

[jokami]

SDTrojan1904

Sorry for asking… but can you include me as well… I really need all the help I can get…

I'll be praying for all of us…

B - 62, 70, 72, 79!!!
A - 68, 81
R - 70, 82
F - 84

"The limit to your abilities is where you place them" - Fortune Cookies

[SDTrojan1904]

Yes, of course! You earned good Karma when you contributed with your helpful mnemonic in my other thread 🙂

[Julie5038]

If both parties gave boots would the realized gain be the lesser of: gain recognized and boot received-boot paid?

[Anonymous]

You only RECOGNIZE gain when you have Realized gain AND Boot Received. The RECOGNIZED gain will be the lesser of BOOT RECEIVED (not paid) or REALIZED gain.

[Julie5038]

Thank you!

[Author]

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