I have a client who used a qualified intermediary to conduct a 1031 exchange for rental properties. They disposed of two properties and acquired one new one. The details of the properties and expenses are below with simplified amounts to make it easier to get help. I thought I had the journal entries correct because everything balanced, but then when doing the taxes it looked like they would have a much greater gain on the exchange than they should. I think made myself confused by trying to look up examples, and I need help with these journal entries and the proper adjustment to schedule M-1 for the deferred gain.
First Property:
Book Value: $95,000
-Accumulated Depreciation: $12,000
Adjusted Basis: $83,000
Sale Price: $240,000
-Expense of Sale: $17,000
-Adjusted Basis: $83,000
Realized Gain: $140,000
Sale Price: $240,000
-Cancellation of Debt: $88,000
-YTD Property Taxes: $1,000
-Expense of Sale: $17,000
Exchange Proceeds: $134,000
Second Property:
Book Value: $180,000
-Accumulated Depreciation: $28,000
Adjusted Basis: $152,000
Sale Price: $480,000
-Expense of Sale: $31,000
-Adjusted Basis: $152,000
Realized Gain: $297,000
Sale Price: $480,000
-Cancellation of Debt: $125,000
-YTD Property Taxes: $4,000
-Expense of Sale: $31,000
Exchange Proceeds: $320,000
Like Kind Property:
FMV of like-kind property received: $630,000
-NBV of relinquished property ($152,000 + 83,000): $235,000
Realized gain or loss: $395,000
One of my journal entries was similar to this:
Dr [Fixed Asset] FMV of like-kind property received: $623,000
Dr [Expense] Expense of Purchase: $3,000
Cr [Liability] New Debt: $172,000
Cr [Asset(?)] Exchange Proceeds (from properties given up): $454,000
Cr [Contra Property Tax Expense] YTD Property Taxes (paid by seller): $1,000
Cr [Cash] Deposit (net after refund of partial deposit): $6,000
Thanks in advance for the help!