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In: Accounting

Ava owned a building held for investment worth $800,000 in which her basis was $545,000. Ava...

Ava owned a building held for investment worth $800,000 in which her basis was $545,000. Ava owed a $320,000 mortgage on the building. She exchanged the building for a warehouse owned by Caddy Corp. which she intends to use in her business. Caddy assumed Ava’s mortgage.

Caddy used the warehouse in its business and it intends to use Ava’s land in its business. Caddy’s basis in the warehouse was $482,000. Caddy owed a $365,000 mortgage on the building that Ava assumed.

Caddy and Ava are completely unrelated.

Required: Input a $ answer for each requirement, but SHOW COMPUTATIONS for partial points.  

1) What is the fair value of Caddy’s warehouse that was transferred to Ava?

2) What is Ava’s realized gain (loss) on the transaction?

3) What is Ava’s recognized gain (loss)?

4) What is Ava’s basis in the warehouse?

5) What is Caddy’s realized gain (loss) on the transaction?

6) What is Caddy’s recognized gain (loss)?

7) What is Caddy’s basis in the building?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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