Adjusted basis calculation of new asset in like-kind exchange
In the
Asset Disposal
tab of each disposed asset, the Adj Tax Basis
field is calculated from the following items:- Adjusted basis of original asset
- Exchange expenses incurred
- Cash paid
- FMV of other property given up
- Liabilities assumed - Liabilities (including mortgages) given up
note
This assumes you're following Notice 2000-4 and Regulation 1.168(i)-6T.
The following fields also can have an impact of the adjusted tax basis:
- Cash received:Cash received reduces the amount of exchange expenses in the equation, but doesn't reduce it to less than zero.
- If the exchange expenses are greater than the cash received, the basis is reduced by the amount of cash received.
- If the cash received is the larger amount, the basis will be reduced by the full amount of the exchange expenses.
- FMV of other (not like-kind) property received:This value affects the equation the same way as cash received.
- FMV of other non sec 1245 like-kind property received:This figure nets against exchange expenses.
- If exchange expenses are greater than the FMV, reduces the basis by the amount of FMV.
- If the FMV is larger, the difference between the 2 figures is added into basis.
