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.© BrainMass Inc. brainmass.com June 3, 2020, 8:23 pm ad1c9bdddf
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 ...
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.