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    Recognized gain and basis for land exchanged by Eunice Jean

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    Eunice Jean exchanges land held for investment located in Rolla, Missouri, for land to be held for investment located near Madrid, Spain. Her basis for the land given up is $250,000 and the fair market value of the land received is $350,000. Eunice Jean also receives cash of $15,000.

    a. What is Eunice Jean's recognized gain?

    b. What is her basis for the land received?

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    Solution Preview

    Section 1031 of the Internal Revenue Code governs exchanges of like-kind property. An exchange for foreign property is not considered like-kind. Like-kind exchanges are limited to property within the 50 states and the ...

    Solution Summary

    The solution explains the code section of tax law that pertains to this transaction, and then calculates the recognized gain and the basis of the land received.