Business K exchanged an old asset (FMV $95,000) for a new asset (FMV $95,000). Business K’s tax basis in the old asset was $107,000. Compute Business K’s realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction. Compute Business K’s realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a nontaxable transaction. Six months after the exchange, Business K sold the new asset for $100,000 cash. How much gain or loss does Business K recognize if the exchange was taxable? How much gain or loss if the exchange was nontaxable?

All requirements solved

Explanation:

A realized loss is the loss that is recognized when assets are sold for a price lower than the original purchase price

1.If Exchange was a taxable transaction:

Realized loss = $95,000 amount realised - $107,000 tax basis = $12,000

Recognized loss = $12,000

Tax basis in new asset = $92,000 cost

2.  If the exchange was a non-taxable transaction:

Realized loss = $95,000 amount realised - $107,000 tax basis = $12,000

Recognized loss = $0

Tax basis in new asset = $104,000 substituted basis

3. If exchange was taxable,

Gain recognized on sale of new asset = ( $100,000 amount realized - $95,000 Tax basis)

Gain recognized on the sale of new asset = $7,000

If exchange was non taxable,

loss recognized on sale of new asset = $100,000 amount realized - $107,000 Tax basis

loss recognized on sale of new asset = $7,000

​participate in networking opportunities that allow you to get to know potential clients, other entrepreneurs, influential people in your community, etc. focus on doing everything you can to cultivate posting word of mouth advertisin

i'ts proportional. if the inflation rate is 12% for example, the cpi will be 12% less.

hope it ,

bioteacher101