Elizabeth exchanges an office building valued at $400,000 with a $75,000 mortgage and adjusted basis of $180,000 for land valued at $275,000.What is Elizabeth's recognized gain on the exchange?

Question

Quizplus · Accepted Answer

Elizabeth's recognized gain is the lesser of the realized gain or the boot received. The realized gain is $220,000 ($400,000 - $180,000). The boot received is $75,000 (the mortgage relief). Therefore, the recognized gain is $75,000.

Elizabeth Exchanges an Office Building Valued at $400,000 with a $75,000