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Income Tax Planning
Chapter 13: Nontaxable Exchanges/ASSUMPTION OF DEBT: EXAMPLE (2 OF 3)
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Chapter Study Session

Chapter 13: Nontaxable Exchanges

ASSUMPTION OF DEBT: EXAMPLE (2 OF 3)

01.Core Concepts

Reilly’s Transaction: (New Property) After Exchange (Old Property) Before Exchange $500,000 FMV* $400,000 FMV 350,000 New Basis 250,000 Basis $150,000 Potential Gain $150,000 Potential Gain *$100,000 Mortgage Boot $100,000 (mortgage) to Ryan. Reilly adds mortgage to old basis to get new basis.