Kahil exchanges a drill press that is used in his business for another drill press.The old drill press had an adjusted basis of $5,000 and the new drill press has a fair market value of $30,000.What is Kahil's recognized gain or loss and the basis of the new drill press?
A)$0 and $5,000.
B)$0 and $30,000.
C)$25,000 and $5,000.
D)$25,000 and $30,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Kahil's exchange qualifies as a like-kind exchange under IRS rules, so no gain or loss is recognized. The basis of the new drill press is the same as the old one, $5,000.

Kahil Exchanges a Drill Press That Is Used in His