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    Realized, Recognized and Deferred Gain or Loss

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    (A) Corporation exchanges several pieces of office furniture ($2,900 value and basis of $1,250) for 10 filing cabinets from (B) Corporation (filing cabinets value of $2,500 with a basis of $3,000). B Corporation provides A Corporation with season tickets, (B)Corporation paid $400 face value for the tickets

    1. What is A Corporation's the and B Corporation's realized and recognized gains?

    2. Their deferred gains or losses?

    3. Their bases in the acquired properties

    4. What alternative transaction to A Corporation would you suggest?

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    Solution Preview

    1. A's realized gain will be:

    Fair market value of filing cabinets $2,500
    Fair market value of tickets 400
    Amount realized $2,900
    Adjusted basis in furniture 1,250
    Total gain $1,650

    Because it need only recognize gain to the extent of the fair market value of boot (i.e., non-like kind property) ...

    Solution Summary

    (A) Corporation exchanges several pieces of office furniture ($2,900 value and basis of $1,250) for 10 filing cabinets from (B) Corporation (filing cabinets value of $2,500 with a basis of $3,000). B Corporation provides A Corporation with season tickets, (B)Corporation paid $400 face value for the tickets

    1. What is A Corporation's the and B Corporation's realized and recognized gains?

    2. Their deferred gains or losses?

    3. Their bases in the acquired properties

    4. What alternative transaction to A Corporation would you suggest?

    $2.19

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