Reference no: EM133018369
Question - Millennium Corporation owns a building with an FMV of $1,300,000. The building was purchased in July 2008 for $800,000 The accumulated depreciation for the building is $111,976. The building is also subject to a mortgage liability of $325,000.
Kraft Corporation owns a building with an FMV of $900,000. The building was purchased on January 3, 2000, for $750,000. The accumulated depreciation on the building is $491,183.
On March 1, 2020, Millennium Corporation and Kraft Corporation exchanged their buildings in a transaction which qualifies as a Like-Kind Exchange for tax purposes. Millennium Corporation agreed to transfer her building with an FMV of $1,300,000 to Kraft Corporation. In Exchange, Kraft Corporation agreed to transfer his building with an FMV of $900,000 to Millennium Corporation. In addition, Kraft agreed to assume Kraft's mortgage liability of $325,000. They also paid cash of $75,000.
Required -
1) Compute the Realized and Recognized gain for Millennium Corporation and Kraft Corporation.
2) Compute the adjusted Basis in the property for Millennium Corporation and Kraft Corporation.
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