@Amay Many Becker questions show basis of property given up = new basis of property received. However, there are questions where that is not the case. Personally, I like to do the whole calculation because I can proof out every piece of what they could ask.
Automobile originally cost $35,000 and has taken $12,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $16,500. The other party agrees to give the taxpayer $3,500 in cash in addition to the new auto. What is the taxpayer's basis?
20,000 Amount received in exchange (16,500 + 3,500)
(23,000) NBV of property given up
(3,000) Realized Loss
(3,000) Realized Loss
3,500 Boot Received
0 Recognized Gain because there was no gain on the exchange.
(3,000) Realized Loss
0 Recognized Loss
(3,000) Deferred Loss
23,000 Property given up
(3,500) Boot received
$19,500 Basis of New Property
I use a different way to calc new basis but it all comes out the same.
NH CPA
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Becker*NINJA Notes/MCQ*
Now I could let these dream killers kill my self-esteem
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