Maud exchanges a rental house at the beach with an adjusted basis of $350,000 and a fair market value of $325,000 for a rental house at the mountains with a fair market value of $305,000 and cash of $20,000.What is the recognized gain or loss?
A)$0.
B)$20,000.
C)$25,000.
D)($25,000).
E)None of the above.

Question

Quizplus · Accepted Answer

The exchange qualifies as a like-kind exchange under IRS rules, so no gain or loss is recognized. The cash received is considered "boot," but since the fair market value of the property received plus the boot equals the adjusted basis of the property given up, there is no recognized gain or loss.

Maud Exchanges a Rental House at the Beach with an Adjusted