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21 May, 15:19

Joseph exchanged land (tax basis of $34,000), that he had held for 4 years as an investment, for similar land valued at $42,000 which was owned by adrian. in connection with this transaction, adrian assumed joseph's $11,000 mortgage. as a result of this transaction joseph should report a long-term capital gain of:

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  1. 21 May, 18:03
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    Joseph should report a long-term capital gain of $8,000. The fact that Adrian assumed the mortgage does not affect Joseph's tax basis. The only relevant facts here are the fact that the land acquired in the exchange has a value of $42,000, and the tax basis of the parcel exchanged is $34,000. $42,000 - $34,000 = $8,000.
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