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tatyana61 [14]
4 years ago
11

Kareem owns a pickup truck that he uses exclusively in his business. The adjusted basis is $22,000, and the fair market value is

$14,000. In March 2019, Kareem exchanges the truck for another truck (worth $14,000) that he will use exclusively in his business.
1. What are Kareem’s realized and recognized gain or loss?
Business
1 answer:
Novosadov [1.4K]4 years ago
5 0

Answer:

The "Kareem" realized loss on the exchange is <u>$8000.</u>

Explanation:

The adjusted basis is = $22000

"Fair market value" is = $14000

"Kareem" exchanges the truck for another truck = worth $14000

"Realized gain" or "Realized loss = basis in the truck - exchange value

Realized gain or loss = $22000 - $14000

Realized gain or loss = $8000

Kareem's loss on the exchange is $8000.

There is no "recognized gain" or "recognized loss"  because the exchange is like a kind exchange which is not documented.

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