Nagin Inc.transferred an old asset in exchange for a new asset worth $84,000 and $6,000 cash.The old asset and new asset were like-kind properties.Which of the following statements is true?
A)If Nagin's basis in the old asset was $95,000,Nagin can recognize a $5,000 loss.
B)If Nagin's basis in the old asset was $85,000,Nagin must recognize a $6,000 gain.
C)If Nagin's basis in the old asset was $79,200,Nagin must recognize a $6,000 gain.
D)None of the above is true.

Question

Quizplus · Accepted Answer

In a like-kind exchange, gain is recognized to the extent of boot received. Since Nagin received $6,000 cash (boot), and the basis in the old asset was $79,200, the gain recognized is $6,000.

Nagin IncTransferred an Old Asset in Exchange for a New Asset