Elizabeth exchanges her retail storage assets for retail displays.In this like-kind exchange,Elizabeth receives $2,000 in cash.The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000.The displays have a fair market value of $10,000 and a basis of $8,000.What is Elizabeth's realized gain on the exchange?
A)zero
B)$3,000
C)$6,000
D)$9,000

Question

Quizplus · Accepted Answer

Elizabeth's realized gain is calculated by subtracting her adjusted basis in the retail storage assets ($3,000) from the fair market value of the retail storage assets ($12,000), which equals $9,000. However, since she received $2,000 in cash as part of the exchange, her recognized gain is only $7,000 ($9,000 - $2,000). Therefore, the correct answer is D, $9,000.

Elizabeth Exchanges Her Retail Storage Assets for Retail Displays