Capital Gains Tax Calculator

Calculating the realized gain or loss in a like-kind exchange requires three steps:

Calculate amount realized by taxpayer Calculate adjusted basis of property transferred   Subtract adjusted basis from amount realized

Calculate amount realized by taxpayer. The amount realized in an exchange is the sum of any money received plus the fair market value of any property (other than money) received. IRC §1001(b). Money received includes the taxpayer's liabilities assumed by another party to the exchange and any liabilities subject to which that party acquires the relinquished property.

Calculate adjusted basis of property transferred. The taxpayer's adjusted basis, in general, is the initial basis in the transferred property or properties, both qualifying and nonqualifying, increased by capital expenditures and decreased by allowable depreciation or cost recovery.

Subtract adjusted basis from amount realized to determine taxpayer's realized gain or realized loss. The realized gain from a sale or other disposition of property ;including disposition through a like-kind exchange) is the excess of the amount realized over the adjusted basis of the property transferred. The realized loss is the excess of the adjusted basis of the property transferred over the amount realized.

The taxpayer's realized gain is the maximum amount of gain that may be recognized. Further calculations are required if the taxpayer will report gain on the installment method or has taken accelerated depreciation or cost recovery on the relinquished property. The taxpayer's basis in the replacement property must be determined to determine the allowable depreciation or cost recovery on the replacement property and the deferred gain to be recognized on a later taxable disposition of the replacement property. When multiple properties or classes of properties are involved in an exchange, the transaction must be broken down into component pans, with fair market value allocated to each asset according to prescribed rules.

The numbers below are estimates and should be reviewed by your tax consultant.