[lizbette]

Hi all. I’m working on the R4 sims for Becker, Sim #3:

Taxpayer traded an old building (purchased 6 years ago) for a new building and fully depreciated personal property. NBV of the old building was $200,000 and FMV was $500,000. The FMV of the new building was $460,000 and the FMV of the fully depreciated personal property received with the new building was $40,000.

The question asks you to input Proceeds, Basis, Gain or (Loss), Short- or Long-Term, Amount to be Reported on Tax Return

Becker lists the answer for “Amount to be Reported on Tax Return” as $260,000. Shouldn’t the answer be limited to $40,000, aka the boot?

REG (8/11/16) -
FAR (TBD) -
AUD (TBD) -
BEC (TBD) -

[nadroj]

You could defer the gain on the old building if it was a like kind exchange but I don't think this qualifies because of the personal property received.

[lizbette]

so since there was personal property received, would you consider that $40,000 as ordinary income, and report it on the tax return? or would you report the 260,000 on the tax return like the answer key says? deferred gains get reported on the tax return?

REG (8/11/16) -
FAR (TBD) -
AUD (TBD) -
BEC (TBD) -

[tuanxn]

What does Becker say for the other inputs?

[tuanxn]

technically, everything is reported on the tax return, but the question is ambiguous as to whether they only mean recognized gain.

https://www.irs.gov/pub/irs-access/f8824_accessible.pdf

[lizbette]

for the other inputs, it's all recognized gain for the “amount to be reported on tax return”. that's why I answered $40,000, but Becker is saying the $260,000 is the right answer. so I guess Becker made a typo. thank you both for your help!

REG (8/11/16) -
FAR (TBD) -
AUD (TBD) -
BEC (TBD) -

[Author]

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