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Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on…
Tanya Fletcher owns undeveloped land (adjusted basis of $80,000 and fair market value of $92,000) on the East Coast. On January 4, 2017, she exchanges it with Lisa Martin (an unrelated party) for undeveloped land on the West Coast and $3,000 cash. Lisa has an adjusted basis of $72,000 for her land, and its fair market value is $89,000. As the real estate market on the East Coast is thriving, on September 1, 2018, Lisa sells the land she acquired for $120,000.
Complete the letter to Tanya advising her of the tax consequences of this exchange.
| Hoffman, Young, Raabe, Maloney, & Nellen, CPAs 5191 Natorp Boulevard Mason, OH 45040 |
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| January 14, 2017 | |||||||||
| Ms. Tanya Fletcher The Corral El Paso, TX 79968 |
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| Dear Ms. Fletcher: | |||||||||
| You asked about the tax consequences of the January 4, 2017 land exchange with Lisa Martin. Based on the data provided, the tax consequences are as follows: | |||||||||
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| Because the transaction_____ as a nontaxable like-kind exchange, only $_____ of your potential gain of $_____ is recognized. The adjusted basis for the land received is $_____. | |||||||||
| If I can be of further assistance, please let me know. | |||||||||
| Sincerely, | |||||||||
| Margaret Adams, CPA Tax Partner |
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