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

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

Jason Owns a Warehouse That Is Used in Business