ASSUMPTION OF DEBT: EXAMPLE (1 OF 3)
01.Core Concepts
Reilly and Ryan engage in a like-kind exchange. Reilly transfers real estate with a fair market value of $400,000 and an adjusted basis of $250,000 to Ryan. Ryan transfers real estate worth $500,000 and an adjusted basis of $200,000, plus a $100,000 mortgage on the property, to Reilly. Including the mortgage, the exchange is an equivalent economic value transfer. The following slides illustrate the tax consequences for Reilly and Ryan.