Advanced Taxation of Business Entities - Chapter 3

New Basis

= FMV of property received

- Deferred gain

+ Deferred Loss

Amount Realized

Amount received - Adjusted Basis

Amount Received

Cash

FMV of property rec'd

& debt relief

Adjusted Basis

Cost/Initial Basis - Accum. Depreciation

Simultaneous exchange

A gain can be realized but not RECOGNIZED because it is tax deferred it will be recognized later on in a different tax year when it is sold.

Boot given

Does NOT generate gain or loss RECOGNITION. It is included in the basis of given up property

Boot received

Recognized gain to the extent of boot rec'd no greater than realized gain

Receiving boot does NOT trigger loss recognition

True

Identification Period

45 days from close of sale finalized