X, as part of a reorganization, exchanges a security with a principal amount of $2,000 and a fair market value of $2,100, for a security with a principal amount of $2,500 and a fair market value of $2,800.The amount of boot X received is

Question

Quizplus · Accepted Answer

The amount of boot received is the difference in fair market value between the security given ($2,100) and the security received ($2,800), which is $700. However, since the question specifically asks for the amount of boot X received, and considering the context usually involves tax implications where boot can be considered as cash or anything else of value received in addition to the like-kind property, the correct calculation should focus on the fair market value difference, making the answer $700. My initial explanation mistakenly focused on the principal amount difference, which is not relevant for determining the amount of boot in such exchanges.

X, as Part of a Reorganization, Exchanges a Security with a Principal