Terry exchanges real estate (acquired on August 25, 2011) held for investment for other real estate to be held for investment on September 1, 2017. None of the realized gain of $10,000 is recognized, and Terry's adjusted basis for the new real estate is a carryover basis of $80,000. Consequently, Terry's holding period for the new real estate begins on August 25, 2011.

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Quizplus · Accepted Answer

This is true because Terry's holding period for the new real estate begins on the date that he originally acquired the exchanged real estate. Additionally, because none of the realized gain is recognized, Terry's adjusted basis for the new real estate will be a carryover basis from the exchanged property.

Terry Exchanges Real Estate (Acquired on August 25, 2011) Held