Pat owns some land with a fair market value of $500,000 and an adjusted basis...
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Accounting
Pat owns some land with a fair market value of $500,000 and an adjusted basis of $425,000. He also owes the bank $150,000 on the mortgage. Jeff owns some land with a fair market value of $400,000 and an adjusted basis of $75,000. There is no debt of Jeffs land. Pat and Jeff agree to exchange properties (subject to the existing mortgage on Pats land). Pat will also pay Jeff $50,000 in cash. What is the realized gain, recognized gain and basis in the new properties for both Pat and Jeff?
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