[needhelpnow]

Adjusted basis (NBV) of property given up

+ GAIN RECOGNIZED

+ Boot Paid

– Boot received

=Basis of new property received

My question is, Gain Recognized has (Cash+Relief of Liabilities)

Boot Received is ???

Cash+Non-like kind property, but why not Relief of Liabilities? I thought Boot was supposed to be Cash Received+Liab Relief+Non-Like Kind Exchange – Liab Assumed)

[Evwy_Mom]

I'm not sure if I'm answering your question or not, but I've struggled with this too, so here goes:

The first thing I have to do is compute the Realized/Recognized Gain. If you have the new asset with FMV of $400, Cash of $30, NET debt relief of $70 (Liability given up $150; Liability assumed $80), and the old asset with a basis of $200.

FMV of new asset: $400

Boot (Cash + Net Debt Relief): $100

Amount Realized: $500

Less: NBV of old Asset: (200)

Gain Realized: $300

Gain Recognized is lesser of Realized Gain or Boot: $100.

Second thing I do is set up a journal entry:

New Basis (Plug) 200

Cash 30

Old Liability 150

New Liability 80

Old Asset 200

Gain RECOGNIZED 100

AUD = 85
FAR = 79
BEC = 79
REG = 65, 72, 75!

I AM DONE!!

[Evwy_Mom]

^That was supposed to have a journal entry formatted with debits and credits, but that obviously didn't work. The top three are debits and the bottom three are credits.

AUD = 85
FAR = 79
BEC = 79
REG = 65, 72, 75!

I AM DONE!!

[Author]

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