Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Three years after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, is Carl’s recognized gain with respect to these transactions? Select one of the answers below and show your work: a. No gain or loss on the exchange with Bob, and $12,000 gain on the subsequent sale b. $11,000 gain on the exchange with Bob, and $12,000 gain on the subsequent sale. c. $12,000 gain on the exchange with Bob, and $279,000 on the subsequent sale. d. None of the above is correct.
Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Three years after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000.
Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for
Select one of the answers below and show your work:
a. No gain or loss on the exchange with Bob, and $12,000 gain on the subsequent sale
b. $11,000 gain on the exchange with Bob, and $12,000 gain on the subsequent sale.
c. $12,000 gain on the exchange with Bob, and $279,000 on the subsequent sale.
d. None of the above is correct.
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