[needhelpnow]

I just wanted to clarify something.

Recognized Gain = LESSER of Realized gain or Boot Received.

What is the exact and complete formula for Boot Received?

+Cash Received

+Liability Relief

+Non-Like Kind Exchange FMV

=Boot Received

But what about Cash Paid or Liab Assumed? Do I subtract that too in order to arrive to Boot Received? And is that the complete formula? Please let me know. Thank you.

[Anonymous]

Boot received is always given in any problem.

I think, boot received and boot paid are netted against each other. Please anyone can correct me if I am wrong.

It's just like when I make a deal with you: “I will give you $10.00 cash if you give me $6.00 cash. In effect, I give you $4.00 cash and you give me nothing.”

However, I made and mastered a summary of these formulas (below) based on my REG book which I find really useful in answering MCQs quicker:

Realized G/L = FMV (Old) – AB (Old)

OR

Realized G/L = FMV (New) – AB (Old) + Boot Received – Boot Paid

---

Recognized Gain = The lower of Realized Gain OR Boot Received

Deferred G/L = Realized G/L – Recognized G/L

---

Basis (New) = AB (Old) + Recognized G – Boot Received + Boot Paid

OR

Basis (New) = FMV (New) + Deferred L – Deferred G

[Anonymous]

I had one question in Becker that had both sides extinguish debt or something like that, and required netting.

However, I don't believe cash given is netted against cash received. I've never seen anything on non-like kind assets (period) given and received, but I assume that like cash it wouldn't be netted.

So I guess I would dig into the netting of liabilities more and tweak that equation for that part. Other than it looks good.

I would also look into this. IDK, it's 2:30 AM and I'm about to pass out, and I'm bad at tax. But whateverrrrrrrrrr (zzzzzzzzz)

https://www.irs.gov/pub/irs-pdf/f8824.pdf

https://www.irs.gov/pub/irs-pdf/i8824.pdf

“Line 15. Include on line 15 the sum of:

Any cash paid to you by the other party,

The FMV of other (not like-kind)

property you received, if any, and

Net liabilities assumed by the other

party—the excess, if any, of liabilities

(including mortgages) assumed by the

other party over the total of (a) any

liabilities you assumed, (b) cash you paid

to the other party, and (c) the FMV of the

other (not like-kind) property you gave up.”

Line 15: “Cash received, FMV of other property received, plus net liabilities assumed by other party,

reduced (but not below zero) by any exchange expenses you incurred (see instructions) .”

[Author]

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