Should I enter adjusted cost basis of a property obtained in a like-kind exchange on line 3 of asset worksheet or actual cost of buying property? They are not the same.

Adjusted cost basis is less because gain on exchanged property is subtracted from actual cost to obtain adjusted cost basis. Instruction on line 3 says "enter total cost when asset was acquired."

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Expert Alumni

Mar 13, 2020 5:57:19 AM

Adjusted Cost Basis is the original cost of the property less any depreciation that was taken on the property.

If you are exchanging land for land then the Adjusted Cost Basis is what you paid for the land since no depreciation is allowed for land.

If the property is a rental property then you would have an amount for depreciation that was taken. For Example Cost of Rental Property $100,000 less $25,000 Depreciation equals Adjusted Cost Basis $75,000.

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Should I enter adjusted cost basis of a property obtained in a like-kind exchange on line 3 of asset worksheet or actual cost of buying property? They are not the same.