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27 September, 09:18

Bud exchanges land with an adjusted basis of $22,000 and a fair market value of $30,000 for another parcel of land with a fair market value of $28,000 and $2,000 cash. What is Bud's recognized gain or loss?

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  1. 27 September, 13:07
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    The recognized gain or loss of Bud is $2,000

    Explanation:

    The aggregate market value is computed as:

    Aggregate market value = Fair market value + Cash

    = $28,000 + $2,000

    = $30,000

    The recognized loss or gain of Bud is computed as:

    Recognized gain or loss = Aggregate market value - Fair market value

    = $30,000 - $28,000

    = $2,000

    So, it is a gain of $2,000
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