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    Nontaxable exchanges - Like kind exchange of a vehicle

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    Explain how realized and recognized gain or loss for a personal-used asset is assessed.

    Mike owns a car that he uses exclusively for personal purpose. Its original cost was $26,000, and the fair market value is $12,000. He exchanges the car and $18,000 cash for a new car.

    a. Calculate his realized and recognized gain or loss.

    b. Calculate his basis for the new car.

    c. Determine when his holding period for the new car begins.

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    https://brainmass.com/business/accounting/nontaxable-exchanges-kind-exchange-vehicle-135198

    Solution Preview

    Using the like kind reporting rules would be correct if the use of the vehicle had changed to business use, but it didn't. The transaction is non-reportable because it is personal and because there is a ...

    Solution Summary

    The solution discussion centers on the application of the like-kind exchange rules with regard to tax reporting. The reporting differences are noted between personal use and business use autos. The solution shows the calculations for the responses.

    $2.19

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