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Old 04-22-2016, 09:10 AM
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Like Kind Transactions: Boot Received

I wonder about this: thank you in advance for your help.

In 'like kind' transactions, line 15 of FORM 8824 requires one to figure the "FV of net boot received". I believe that that formula is as follows:

net cash received + FV of UNlike kind received + net debt relief.

My pressing question is this: I already know that the 'FV of net boot received' cannot be <0. But can the 'net debt relief' be <0 if the FINAL equation 'FV of net boot received' is satisfied with the requirement of being more than zero?

Hypothetical situation:

net cash received = 100
FV of UNlike kind received = 150
debt assumed = 125 but debt relief is 80. Here, is 'net debt relief' -45 or zero?

Thus, the final question is this: Is "FV of net boot received" 250 or 205?

Do BOTH 'FV of net boot received" AND 'net debt relief' have to be zero or greater OR is it required that ONLY "FV of net boot received" be >0, thus allowing for purpose of this situation, that 'net debt relief' can be under zero? - David age 66



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Old 04-23-2016, 01:14 PM
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Join Date: Oct 2010
Posts: 5,227
My pressing question is this: I already know that the 'FV of net boot received' cannot be <0. But can the 'net debt relief' be <0 if the FINAL equation 'FV of net boot received' is satisfied with the requirement of being more than zero?

Hypothetical situation:

net cash received = 100
FV of UNlike kind received = 150
debt assumed = 125 but debt relief is 80. Here, is 'net debt relief' -45 or zero?=-=.i guess it is $-45 as you assume more than the debt relief. Say, you exchange a property with a mortgage debt balance of $25k. You assume a mortgage of $12kon the Replacement Property you receive in the exchange. In this case, your net mortgage relief is $13k; the difference between the mortgage you assume $12k and the mortgage on the property you transferred $25k .This amount your net mortgage relief counts as boot received by you.
Mortgage you gave up was $25k
less mortgage you assumed was $12k
Your net mortgage relief is $13k


Thus, the final question is this: Is "FV of net boot received" 250 or 205?

Do BOTH 'FV of net boot received" AND 'net debt relief' have to be zero or greater OR is it required that ONLY "FV of net boot received" be >0, thus allowing for purpose of this situation, that 'net debt relief' can be under zero? - David age 66
======>I guess it is $205;b 250-45=205basically, in this situation, boot received is the money, $100,or the FMV of "other property" received by you, $150, as a taxpayer in an exchange. Mortgage boot , I mean debt relief, is yourreduction in mortgage liabilities on a replacement property . Debt reduction boot occurs when your debt on replacement property is less than the debt which was on the relinquished property. Say, you exchange a property with a mortgage balance of $25,000. You assume a mortgage of $12,000 on the Replacement Property you receive in the exchange. Your mortgage relief is $13,000?the difference between the mortgage you assume ($12,000) and the mortgage on the property you transferred ($25,000). This amount?your net mortgage relief?counts as boot received by you.
Mortgage you gave up was $25,000
less mortgage you assumed was $12,000
Your net mortgage relief is $13,000
Money includes all cash equivalents plus liabilities of the taxpayer assumed by the other party, or liabilities to which the property exchanged by the taxpayer is subject to.



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