Questions:
Tanya Fletcher owns undeveloped land (adjusted basis of $80,000, fair market value of $92,000) on the east coast. on 01/04/13, she exchanges it with her sister, Lisa for undeveloped land on the west coast and $3,000 cash. Lisa has an adjusted basis of $72,000 for her land and fair market value of $89,000. As the real estate market on the east coast is thriving on 9/01/14, Lisa sells the land she acquired for $120,000.
A. What are Tanya's recognized gain or loss and adjusted basis for the west coast land on 01/04/13?
B. What are Lisa's recognized gain or loss and adjusted basis for the east coast land on 01/04/13?
C. What are Lisa's recognized gain or loss on 9/01/14 sale?
D. What effects does Lisa's 2014 sale have on Tanya?
E. Write a letter to Tanya advising her on how she could avoid any recognizition of gain associated with the 01/01/13 exchange prior to her actual sale of land.