In: Advanced Math
Taxpayer T owns an office building worth $950,000, encumbered by a mortgage of $710,000. His original cost was $830,000, and he has taken depreciation deductions of $185,000 on the building.
T wants to exchange his building for another office building worth $800,000. He will assume the existing mortgage of $580,000 on the new building.
(This is a practice problem for an exam, please show work so I can understand the problem and how to get the correct answer.)
a. Realized gain
b. Recognized gain
c. Basis in the new building