In a like-kind exchange, what is considered Dave's substitute basis in the acquired property?

In a like-kind exchange, the substitute basis of the property acquired is typically determined by the basis of the property given up, adjusted for any cash or other property received, commonly referred to as "boot." The key concept is that the basis of the new property acquired in the exchange will carry over from the old property, taking into account any adjustments that might arise.

Assuming that Dave is exchanging a property with an adjusted basis (the original cost adjusted for any improvements or depreciation) of $315,000, this value would serve as the substitute basis for the newly acquired property. The basis does not change due to the fact that it represents the value that Dave originally invested in the old property, minus any boot received or plus any boot paid to bring things to a new adjusted basis.

Therefore, if the transaction meets the requirements of a like-kind exchange and the proper calculations are conducted, $315,000 logically emerges as the correct substitute basis for Dave in the newly acquired property.