Tax-free exchanges-what is jakes realized-recognized gain

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Jake has heard that you are an expert on tax-free exchanges. He has a piece f property on Center Street with a basis of $90,000 and a current fair market value of $250,000. Sam owns a property on State Street, with a current fair market value of $210,000, and a basis of $225,000. Tammy is a current owner of 1927 Ford Edsel (an antique car) with a fair market value of $40,000. Sam buys Tammy's automobile for $40,000 cash, then trades to Jake the State Street property and the $40,000 automobile in exchange for Jake's Center Street property/ Jake and Sam will use both the Center Street and the State Street property as rental properties.

1. What is Jake's realized and recognized gain?

2. What is Jake's basis all of in the property he receives from Sam?

3. What is Sam's realized and recognized gain?

4. What is Sam's basis in the property he receives from Jake?

Reference no: EM13821728

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