Fred and Sarajane exchanged equipment in a qualifying likeki

Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $12,000 (fair market value of $15,000) in exchange for Sarajane\'s equipment with a fair market value of $13,000 plus $2,000 cash. What is Sarajane\'s basis in the equipment received in the exchange, assuming her basis in the equipment given up was $12,000? a.$15,000 b.$14,000 c.$12,000 d.$0 e.None of these choices are correct.

The answer is B. $14000 Please show me the steps how to get the answer. Thanks!

Solution

Answer a. $14,000 Adjusted Basis of Equipment for Sarjane Basis of Equipment given up        12,000 Cash Paid           2,000 Total Adjusted Value        14,000