Bud exchanges a business use machine with an adjusted basis of $22,000 and a fair market value of $30,000 for another business use machine with a fair market value of $28,000 and $2,000 cash. What is Bud's recognized gain or loss?
A)$0
B)$2,000
C)$6,000
D)$8,000
E)None of the above

Question

Quizplus · Accepted Answer

Bud's recognized gain is the lesser of the realized gain ($8,000) or the boot received ($2,000). Therefore, the recognized gain is $2,000.

Bud Exchanges a Business Use Machine with an Adjusted Basis