Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $500,000 and a fair value of $700,000. Kapono paid $50,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Repeat requirement 1 assuming that the fair value of the farmland given is $400,000 instead of $700,000. 3. Repeat requirement 1 assuming that the exchange lacked commercial substance.
Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $500,000 and a fair value of $700,000. Kapono paid $50,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Repeat requirement 1 assuming that the fair value of the farmland given is $400,000 instead of $700,000. 3. Repeat requirement 1 assuming that the exchange lacked commercial substance.
Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions
Section: Chapter Questions
Problem 37CE
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Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $500,000 and a fair value of $700,000. Kapono paid $50,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Repeat requirement 1 assuming that the fair value of the farmland given is $400,000 instead of $700,000. 3. Repeat requirement 1 assuming that the exchange lacked commercial substance.
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT