Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be

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The taxable income from this transaction would be the $10,000 in cash received, as this is considered boot in the context of a like-kind exchange under U.S. tax law. The main principle of a like-kind exchange (also known as a 1031 exchange) is that if you exchange real estate used for business or investment purposes for another property of like kind, you do not recognize a gain or loss until you sell or otherwise dispose of the new property. However, if you also receive cash (boot), the cash is immediately taxable to the extent of the gain realized on the exchange. In this case, the gain realized would be the difference in value between the new property and the old property plus cash received, but only the cash received ($10,000) is immediately taxable.

Alberto Bought Commercial Property in 1980 for $50,000