Exchange into a warehouse to be used in his business

Assignment Help Financial Management

Reference no: EM131464400

Tyson had undeveloped investment land with a basis of $200,000 that he wanted to sell and exchange into a warehouse to be used in his business. The land was encumbered by a $40,000 mortgage. The land was worth $350,000. He found a buyer willing to pay him $300,000 cash and assume the $50,000 mortgage.

He transferred the land to a third party accomodator on April 1st of the current year and the sale was closed with the buyer. On May 10th with the help of a commercial real estate agent Tyson identified two suitable warehouses. On August 10th he made an offer on the first building which was rejected. On August 13th an offer was accepted on the second warehouse. The second warehouse sold for $325,000.

On September 23rd the accomodator transferred $325,000 cash (300,000 from the original property plus 25,000 from a mortgage Tyson took on the property) to the seller of the second warehouse and conveyed title to the warehouse to Tyson.

A. What is Tyson's amount realized?

B. What is Tyson's gain realized?

C. What is Tyson's basis in the new warehouse?

Reference no: EM131464400

Questions Cloud

Beginning to plan for retirement : Mr. Moore is 35 years old today and is beginning to plan for his retirement.

Change in the bonds price in dollars and percentage terms : What will be the change in the bond’s price in dollars and percentage terms?

Calculate the dirty price of this transaction : Calculate the accrued interest due to the seller from the buyer at settlement. Calculate the dirty price of this transaction.

Forward rate expressed in terms of peso to dollar : What is the 3-month forward rate expressed in terms of peso to dollar?

Exchange into a warehouse to be used in his business : Tyson had undeveloped investment land with a basis of $200,000 that he wanted to sell and exchange into a warehouse to be used in his business.

Compute the current cost of using the financing option : We are considering constructing a new $130 million 320-suite tower on our Venetian property. Please compute the current cost of using the financing option

Use dividend-discount model to estimate its value per share : Procter and Gamble? (PG) paid an annual dividend of $ 1.61 in 2009. use the? dividend-discount model to estimate its value per share at the end of 2009.

Calculate the NPV of FCF associated with each alternative : calculate the NPV of the FCF associated with each alternative. The NPV of renting the machine is $?

Most important decisions made by firms management : capital investments are considered the most important decisions made by a firm’s management.

User Account

All Pages