McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 34

Olympia Corporation, of Kittery, Maine, wants to exchange its manufacturing machinery for Bangor Company's machinery.Both parties agree that that Olympia's machinery is worth $100,000 and that Bangor's machinery is worth $95,000.Olympia would like the transaction to qualify as a like-kind exchange.What could the parties do to equalize the value exchanged but still allow the exchange to qualify as a like-kind exchange? How would the necessary change affect the tax consequences of the transaction?