Olivia exchanges land with a $50,000 basis plus marketable securities with a $20,000 basis for a larger parcel of land worth $110,000 in a transaction that otherwise qualifies as a like-kind exchange. The FMV of the land and marketable securities exchanged by Olivia is $75,000 and $35,000 respectively.
a. What is the amount of gain realized and recognized by Olivia on each asset?
b. What is the amount of Olivia's basis in the new land?
a.
b. Olivia's basis in the new land is: $85,000:
$50,000 basis of old land + $20,000 of marketable securities + 15,000 gain recognized, or
$110,000 FMV new land - $25,000 unrecognized gain
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