Problem 15-28 (LO. 2) Kareem owns a pickup truck that he uses exclusively in his

Question

Problem 15-28 (LO. 2) Kareem owns a pickup truck that he uses exclusively in his business. The adjusted basis is $22,000, and the fair market value is $14,000 Kareem exchanges the truck for another truck that he will use exclusively in his business. If an amount is zero, enter "O". a. Kareem's realized , and his recognized is b. Kareem's basis in the new truck is s c. What are the tax consequences to Kareem if he used the old truck and will use the new truck exclusively for personal purposes? He will have a realized of$ that recognized, and the basis for the new truck is

Explanation / Answer

SOLUTION

(A) If the truck is later sold for it`s fair market value of $14,000, the $8,000 postponed loss is recognized.

(A)

(B) Kareem's basis in the new truck is $22,000.

(C) If uses for the personal purpose, basis would be 14,000

Amount ($) Amount Realized 14,000 Adjusted basis (22,000) Realized gain (8,000) Recognized gain (8,000)

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