What is Laura adjusted basis for the new parcel of land

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Problem - In two unrelated transactions, Laura exchanges property that qualifies for like-kind exchange treatment. In the first exchange, Laura gives up land purchased in May 2017 (adjusted basis of $20,000; fair market value of $17,000) in exchange for a different parcel of land (fair market value of $15,000) and $2,000 cash. In the second exchange, Laura receives a parking garage (to be used in her business) with a fair market value of $50,000 in exchange for a plot of land she had held for investment. The land was purchased in April 2011 for $12,000 and has a current fair market value of $48,000. In addition to transferring the land, Laura pays an additional $2,000 to the other party.

Required -

a. What is Laura's adjusted basis for the new parcel of land?

b. When does the holding period begin?

c. What is Laura's adjusted basis for the parking garage?

d. When does the holding period begin?

e. How could Laura structure either of the transactions differently to produce better tax consequences?

Reference no: EM132659953

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