What is the present value of $1,400 a year at a discount rate of 8 percent if the first payment is received 7 years from now and
1 answer:
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Answer:
a. Realized gain = $45,330
Recognized gain = $0
b. $302,200
Explanation:
a. The realized gain is the increase in Camilo's economic position, that is, the difference between the fair market value of both properties. The recognized gain is the taxable gain, which is zero in this situation, since the new property is a compensation.
b. Since there is no recognized gain, the new property must have the same basis as the previous condemned property, which is $302,200.