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This is a research paper on INCOME TAX FUNDERMENTAL 2017 Your supervisor has asked you to research the following situation concerning Owen and Lisa...
This is a research paper on INCOME TAX FUNDERMENTAL 2017
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2016, Owen and Lisa exchange business pickup trucks. Lisa gives up a blue pickup truck with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a red pickup truck with a fair market value of $5,500 and cash of $500. Owen's adjusted basis in the truck he exchanges is $2,500. In March 2017, Owen sells the blue pickup truck to a third party for $5,800.
Required: Go to the IRS website (www.irs.gov). Locate and review Publication 544, Chapter 1, Nontaxable Exchanges. Please explain and calculate the amount of Owen and Lisa's gain recognition for 2016. Also determine the effect, if any, of the subsequent sale in 2017.
I need like two page research paper. Thank you.