Calculate tax gain realized and recognized on the exchange

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Watson, a calendar year corporation, reported $1,250,000 net income before tax on its financial statements prepared in accordance with GAAP. During the year, Watson exchanged one piece of commercial real estate for another. The real estate given in the exchange had an original cost of $550,000, accumulated book depreciation of $350,000, and accumulated tax depreciation of $410,000. The real estate received in the exchange has a $650,000 FMV.

a. Calculate Watson's book gain on the exchange.

b. Calculate Watson's tax gain realized and recognized on the exchange.

Reference no: EM131260264

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