Yael exchanges an office building worth $150,000 for investment land worth $175,000. Yael also transferred stock worth $25,000 to the other party. Yael's adjusted basis in the building and stock is $180,000 and $11,000, respectively. How much gain or loss will Yael recognize on the exchange?

Question

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Yael's total adjusted basis is $191,000 ($180,000 for the building + $11,000 for the stock). The total value received is $175,000 for the land. The recognized gain is the difference between the value received and the adjusted basis: $175,000 - $191,000 = -$16,000. However, since the transaction involves a like-kind exchange, Yael recognizes a gain of $14,000, which is the value of the stock transferred ($25,000) minus its adjusted basis ($11,000).

Yael Exchanges an Office Building Worth $150,000 for Investment Land