Kimbo Inc. exchanged an old asset ($180,000 FMV and $145,000 adjusted basis) plus $10,000 cash for a new asset with a $190,000 FMV. What is Kimbo's basis in the new asset if the transaction qualifies as a like-kind exchange?

Question

Quizplus · Accepted Answer

In a like-kind exchange, the basis in the old asset carries over to the new asset. Therefore, Kimbo's basis in the new asset would be $145,000 (same as the adjusted basis of the old asset) plus the cash paid of $10,000, for a total of $155,000.

Kimbo Inc Exchanged an Old Asset ($180,000 FMV and $145,000 Adjusted