Sarah exchanges a yellow bus (used in her business) for Tyler’s gray bus and some garage equipment (used in his business). The assets have the following characteristics:
|
Adjusted Basis |
Fair Market |
|
|
Yellow bus |
$6,000 |
$15,000 |
|
Gray bus |
3,000 |
11,000 |
|
Equipment |
2,000 |
4,000 |
a. What are Sarah’s recognized gain or loss and basis for the gray bus and garage equipment?
b. What are Tyler’s recognized gain or loss and basis for the yellow bus?