Question

Arlington llc traded machinery used in its business to a machinery dealer for some new machinery. arlington originally purchased the machinery for $60,000 and it had an adjusted basis of $28,000 at the time of the exchange. the new machinery had a fair market value of $35,000. arlington also received $2,000 of office equipment in the transaction. what is arlington's gain or loss recognized on the exchange?

Answer 1

Arlington originally purchased the machinery for $60,000 and it had an adjusted basis of $28,000 at the time of the exchange. The new machinery had a fair market value of $35,000. Arlington also received $2,000 of office. Arlington's gain or loss recognized on the exchange is $2,000.The gain recognized is the lesser of the fair market value of the boot ($2,000 of office equipment) or realized gain of $9,000