The substituted basis rule results in permanent nonrecognition of gains and losses realized in a nontaxable exchange.

Name: The substituted basis rule results in permanent nonrecognition of gains and losses realized in a nontaxable exchange.
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The substituted basis rule results in temporary nonrecognition of gains and losses, as the basis of the new asset is adjusted to reflect the deferred gain or loss, which will be recognized upon the future sale or disposition of the asset.

The Substituted Basis Rule Results in Permanent Nonrecognition of Gains