ANSWERS TO QUESTIONS
Also, if a gain occurs, the gain is not deferred (1) because the exchange has commercial substance and (2) the cost paid exceeds 25% of the total value of the property received.) New Machine Basis of new machine Cash paid ($35,000 – $20,000) $15,000 Fair market value of old machine 20,000 Installation cost 1,500 Total cost of new machine $36,500 ................
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