Which of the following situations involving an exchange of business property exe
ID: 2559495 • Letter: W
Question
Which of the following situations involving an exchange of business property exemplifies a fully nontaxable exchange ? Giving up a machine and $5,000 for another machine; giving up a machine for another machine and $5,000; giving up a truck for a machine; giving up a lot for another lot and the other person pays $2,000 expense of the exchange. Which of the following situations involving an exchange of business property exemplifies a fully nontaxable exchange ? Giving up a machine and $5,000 for another machine; giving up a machine for another machine and $5,000; giving up a truck for a machine; giving up a lot for another lot and the other person pays $2,000 expense of the exchange.Explanation / Answer
The situation involving an exchange of business property exemlifies a fully non taxable exchange is giving up a machine and $ 5000 for another machine becauseno gain or loss is recognized on the exchange if you pay money or give up other for a different property in a like-kind exchange, but your basis in the new property is your basis in the like-kind property you give up plus the money you pay and the value of the other property you give.