Like Kind Exchanges

Question 1

When a person receives Boot in what kind exchange, what is their recognized game?

Answer 1

The amount of the Boot received

Question 2

When a person is giving up property, what is the value used?

Answer 2

The adjusted basis of the property

Question 3

When a person is receiving property in a like kind exchange, what is the value of the property received?

Answer 3

Fair market value

Question 4

If a person is giving up property with a basis of $300,000 and they have taken $100,000 of depreciation, what is their adjusted basis BEFORE the exchange?

Answer 4

$200,000

$300,000 - $100,000

Question 5

If a person is receiving property that has a fair market value of $600,000, they receive boot of $100,000. What is the following

Realized gain?
Recognized gain?
Deferred gain?

Answer 5

Realized Gain-$600,000-$200,000 (adj basis of prop giving up) =$400,000

Recognized Gain - $100,000 (Boot)

Deferred Gain - $600,000-$200,000-$100,000 =$$300,000

Question 6

What is the recognized gain when there is no boot received? How does this affect the adjusted basis?

Answer 6

Recognized gain is zero

Adjusted basis is unchanged

Question 7

To determine the adjusted basis in a like kind exchange, if depreciation has been taken on the property, what must be done first to determine the adjusted basis?

Answer 7

Cost/Original Basis - Depreciation + Improvements
= Adjusted Basis

Question 8

What is the cost basis in a property?

Answer 8

Cost of property plus Acquisition cost (commissions and legal fees)

Question 9

In a like kind exchange will the adjusted basis in the new property change if no boot was exchanged?

Answer 9

No