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Your client, I. M. Wheeler, is considering exchanging commercial property with R.E. Investments, Inc. ...

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Accounting

Your client, I. M. Wheeler, is considering exchanging commercial property with R.E. Investments, Inc.
Wheeler owns a warehouse which she has held for investment since 2015 with a fair market value of $675,000, subject to a mortgage of $350,000 and an adjusted basis of $175,000.
R.E. Investments owns a rental property with a fair market value of $540,000, subject to a mortgage of $365,000.
The planned transaction is for Wheeler to exchange his property for R.E. Investments' property plus $150,000 cash. Each party will assume the mortgage on the property received.
Please analyze any gain realized and/or recognized, the taxation, if any, and Wheelers basis in the new property.

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