Arlington LLC traded machinery used in its business to a machinery dealer for some new machinery.Arlington originally purchased the machinery for $60,000 and it had an adjusted basis of $28,000 at the time of the exchange.The new machinery had a fair market value of $35,000.Arlington also received $2,000 of office equipment in the transaction.What is Arlington's gain or loss recognized on the exchange?

Question

Quizplus · Accepted Answer

Arlington recognizes a gain of $2,000, which is the fair market value of the office equipment received as boot in the exchange. The exchange of machinery qualifies as a like-kind exchange, so the gain is recognized only to the extent of the boot received.

Arlington LLC Traded Machinery Used in Its Business to a Machinery