Chaney Exchanges a Truck Used in Her Business for Making

Essay

Chaney exchanges a truck used in her business for making deliveries for a smaller more fuel-efficient truck to be used in her business for making deliveries.The adjusted basis for her truck is $32,000.The smaller truck has a fair market value of $33,000.In addition,Chaney receives cash of $4,000.
a.Calculate Chaney's realized and recognized gain or loss.
b.Calculate Chaney's basis for the assets she received.
a. $\begin{array}{ll}\text { Amount realized }(\$ 33,000+\$ 4,000) & \$ 37,000 \\\text { Adjusted basis } & \underline{(32,000)} \\\text { Realized gain } & \$ 5,000\\\text { Recognized gain }&\$4,000\end{array}$ a. $\begin{array}{ll}\text { Amount realized }(\$ 33,000+\$ 4,000) & \$ 37,000 \\\text { Adjusted basis } & \underline{(32,000)} \\\text { Realized gain } & \$ 5,000\\\text { Recognized gain }&\$4,000\end{array}$