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A taxpayer is trading in an automobile used solely for business purposes for another automobile...

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Accounting

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is worth $22,000. The taxpayer is also assuming a liability secured by the new auto of $2,000.

What is the gain or loss realized, recognized, and basis in the new asset?

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