Answer:
All requirements solved
Explanation:
A realized loss is the loss that is recognized when assets are sold for a price lower than the original purchase price
1.If Exchange was a taxable transaction:
Realized loss = $95,000 amount realised - $107,000 tax basis = $12,000
Recognized loss = $12,000
Tax basis in new asset = $92,000 cost
2. If the exchange was a non-taxable transaction:
Realized loss = $95,000 amount realised - $107,000 tax basis = $12,000
Recognized loss = $0
Tax basis in new asset = $104,000 substituted basis
3. If exchange was taxable,
Gain recognized on sale of new asset = ( $100,000 amount realized - $95,000 Tax basis)
Gain recognized on the sale of new asset = $7,000
If exchange was non taxable,
loss recognized on sale of new asset = $100,000 amount realized - $107,000 Tax basis
loss recognized on sale of new asset = $7,000
