[rilakkuma]

I am using Becker for my REG review.

The explanation for question CPA-06420 shows that we don’t offset the boot received (a trailer) with the boot paid (cash), but why?

In another Becker question, both boot received and paid are mortgage, we offset each other.

So I’m confused now. Under what circumstance we are not allowed to offset the boot?

Thank you in advance!

[rilakkuma]

Can anyone help me PLEASE?!

[Anonymous]

That series of questions threw me too.

The way I tried to remember it is that mortgages are treated like cash. You can net cash and mortgage liabilities against each other but a trailer is considered property and not boot so don't net that with other boot.

The trailer/property is figured into the calculation to get the gain realized and basis of the new property though.

[rilakkuma]

@Allyson

Thank you for the explanation! Really helped me a lot!

[Anonymous]

Hi Old post so I dont know if Ill get an answer but I just did this problem and still dont get it. Maybe just my lack of grasping the concept but Either the trailer's boot and therefore should be netted with the cash or if it is not boot, its not boot and therefore theres only the $1K boot paid, right?

If its not boot it should have nothing to do with the basis as its not in the basis of the item given up, it shouldnt affect the RECOGNIZED gain and its not boot so………..?

[Anonymous]

The way I remember it is that if both parties take on liability of each other then they are offset, otherwise they aren't. If they just give cash and receive a truck, then it's not offset.

[Anonymous]

I think for those problems the best way is to remember the formula for calculating the basis

Basis=carryover+plus gain recognized-boot received+plus boot paid

[gobias]

Old bump.

Can anyone explain this to me? I thought the only scenario where you can't net boot received and boot paid to calculate gain on like-kind exchanges is when you have debt boot paid and cash boot received.

However, I just came across the above question in becker where property boot received was not netted against cash boot paid. This isn't covered in becker, so can somebody please list all the scenarios where boot is not netted?

F - 86
R - 90
A - 97
B - 91

[Author]

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