Jason owns a warehouse that is used in business.The FMV of the warehouse is $200,000 (basis $120,000),and the warehouse is subject to a mortgage of $40,000.Jason exchanges the warehouse for land valued at $150,000.The other party also pays him $10,000 cash and assumes the mortgage on the warehouse.Jason's basis in the land received will be
A)$120,000.
B)$150,000.
C)$180,000.
D)$200,000.

Question

Quizplus · Accepted Answer

Jason's basis in the land received is calculated as the basis of the warehouse ($120,000) minus the mortgage assumed by the other party ($40,000) plus the cash received ($10,000), resulting in $120,000.

Jason Owns a Warehouse That Is Used in Business