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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 581
Experience:  10 years experience
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I am trying to record a 1031 Exchange. the original property

Customer Question

Hi, I am trying to record a 1031 Exchange. the original property sold for $500,000. Only $300,000. is being used for the 1031 exchange. New property purchased was for $250,000. I have Gain on Sales of original asset is 470,000. How do I adjust out the Exchange amount ($300,000) from my Gain on Sale (Equity account) of $470,000. What kind of account do I use?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: Can yo help me figure out what journal entry to make?
Submitted: 8 months ago.
Category: Tax
Expert:  Mark Taylor replied 8 months ago.

Hi, my name is Mark. I would be happy to help you with your questions.

Expert:  Mark Taylor replied 8 months ago.

So you sold a property for $500,000 and had a $470,000 gain?

Customer: replied 8 months ago.
Expert:  Mark Taylor replied 8 months ago.

So based on a quick analysis you have a deferred gain of $220,000.

Expert:  Mark Taylor replied 8 months ago.

The deferred gain would be a liability on the balance sheet.

Expert:  Mark Taylor replied 8 months ago.

Your basis of $30,000 essentially carried forward to the replacement property.